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The efficient functioning of the labour market is an important factor that affects long-term economic growth. The interaction of supply and demand on the labour market is influenced by institutions which change the motivations and behaviour of economic actors and, ultimately, the flexibility of the labour market. There is no consensus in the literature on the effect these institutions have on labour market outcomes. This chapter focuses on a set of selective labour market institutions (employment protection legislation, minimum wages, unemployment benefits, labour taxation, trade unions and active labour market policies), compares their relevance to other European Union (EU) countries and through the lens of the Beveridge curve it tries to evaluate their impact on effectiveness of the Czech labour market. The international comparison shows that most of the considered institutions/regulations do not reach such importance (except employment protection legislation) and that they have a significant negative effect on labour market outcomes. Even the model of the Beveridge curve does not indicate that the Czech labour market is characterised by rigidities that would impair the effectiveness of a matching process at the aggregate level.

Purpose – Ascertaining the extent to which the generalized decline in union density, as well as the erosion in centralized bargaining structures and developments in other labor institutions, have contributed to rising within-country inequality.

Methodology – Econometric analysis of a newly developed dataset combining information on industrial relations and labor law, various dimensions of globalization, and controls for demand and supply of skilled labor for 51 Advanced, Central and Eastern European, Latin American, and Asian countries from the late 1980s to the early 2000s, followed by an analysis of 16 advanced countries over a longer time frame (from the late 1970s to the early 2000s).

Findings – In contrast to previous research, which finds labor institutions to be important determinants of more egalitarian wage or income distributions, the chapter finds that trade unionism and collective bargaining are no longer significantly associated with within-country inequality, except in the Central and Eastern European countries. These findings are interpreted as the result of trade unionism operating under more stringent structural constraints than in the past, partly as a result of globalization trends. In addition, despite much talk about welfare state crisis, welfare states, historically the result of labor's power and mobilization capacity, still play an important redistributive role, at least in advanced countries.

Practical implications – Union attempts at equalizing incomes by compressing market earnings seem ineffective and impractical in the current day and age. Unions should seek to increase the workers’ skill levels and promote an egalitarian transformation of the workplace. This type of “supply-side” egalitarianism is not a new strategy for unions, but is very much embedded in the unions’ DNA.

Purpose – This study develops a theoretical argument that social networks are embedded in the macro-level institutional environment. From the perspective of institutional embeddedness, I investigate the changing patterns and implications of social networks in job search and job earnings after China's overhaul of its employment system in the mid-1990s.Methodology/approach – The empirical evidence is drawn from 2003 Chinese General Social Survey data. I conduct statistical analyses to examine the roles of networks in job search and earning disparity by comparing two groups who obtained the job before and after the emerging labor market in urban China, respectively.Findings –Social networks have become much more popular in job search in the emerging labor market. Use of social networks in job search has also become more differentiated across job positions and employment organizations. While managerial status of the key helper and direct ties yield greater returns to employee earnings, strong indirect ties make less contribution to job earnings in the emerging labor market than that under the state-dominated employment system.Research implications – The findings suggest that we should analyze the concrete institutional environment to appreciate the roles of social networks in job search and social inequality.Originality/value – This study highlights that institutions are the key factor to shape the patterns and significance of social networks. As institutions evolve, network patterns and their significance can change accordingly.

Over the last few decades, precarious work rose as an important feature of socioeconomic insecurity in contemporary Europe. The following study asks: How do labor market institutions and labor market conditions shape work precarity in Europe? This research captures the elusive concept of precarious work by measuring the degree to which a job (1) is insecure and uncertain, (2) offers poor prospects of career mobility, and (3) puts workers in an economically insecure position with low pay. Building on two theoretical paradigms, the Varieties of Capitalism and the Power Resource Theory, this study derives and tests hypotheses about how macro-level factors shape the variation in the distribution of precarious work in 32 European countries. Combining individual-level data from the 2010 European Working Conditions Survey with country-level data from multiple sources, my findings suggest that work precarity decreases in countries with high percentages of employees in all enterprises receiving continual training, high percentages of all enterprises providing on-the-job training for employees, and high levels of spending on active labor market policies.

While there has been intense debate in the empirical literature over the evolution of the college wage premium in the United States, its evolution in Europe has received little attention. This paper investigates the causes of the evolution of the college wage premium in 12 European countries from 1994 to 2009, assessing the relevance of the supply factor as a determinant of the college wage premium. I use cross-country variation in relative supply, demand, and labour market institutions to examine their effects on the trend in wage inequality. I address possible concerns of endogeneity of the relative supply using an IV strategy exploiting the differential legislations of university autonomy and their variations over time. Results show that the strong increase in the relative supply that European countries have experienced has decreased the college wage premium. The most relevant institution is the minimun wage, which significantly decreases college wage premium.

Institutions underpin the operation of national economies. These differ significantly between countries reflecting varying historical paths, policy choices and national cultures. Moreover, they need to be understood systemically as an ensemble of relations between their component parts: financial systems, corporate governance, industrial relations, patterns of state intervention, etc., have evolved together so that their operation and effects tend to reinforce each other. Different countries faced by common exogenous changes will tend to evolve along different lines rather than converge. National institutions matter: they significantly affect economic performance and distribution.

Globally, Denmark stands out in terms of achieving high employment rates, containing unemployment and providing a labour market model combining flexibility, security and activation with a strong role for the social partners. The Danish labour market institutions and policies are seen as the catalyst for the transformation from industrial economy to a globalised, post-industrial and knowledge-based economy in which socio-economic equality and workforce security go hand in hand with competitiveness and the adaptability of business. In the 2000s, this mutual relationship came to be known as the Danish flexicurity model. Meanwhile, as a policy blueprint, ‘flexicurity’ has never really influenced Danish politics, and the reforms implemented since the 2000s have deviated from the premises of the model. This paper critically assesses the Danish model and its institutional components. It tracks the emergence of the Danish collective bargaining model as well as the flexicurity model. It scrutinises the challenges and performance of the current Danish labour market institutions and policies in a comparative perspective and discusses the extent to which the Danish experiences can and should be imitated abroad.

Long considered the classic coordinated market economy featuring employment security and relatively little employment precarity, the German labor market has undergone profound changes in recent decades. We assess the evidence for a rise in precarious employment in Germany from 1984 to 2013. Using data from the German Socio-Economic Panel through the Luxembourg Income Study, we examine low-wage employment, working poverty, and temporary employment. We also analyze changes in the demographics and the education/skill level of the German labor force. Although employment overall has increased, there has been a simultaneous significant increase in earnings and wage inequality. Moreover, there has been a clear increase in all three measures of precarious employment. The analyses reveal that models including a wide variety of independent variables – demographic, education/skill, job/work characteristics, and region – cannot explain the rise of precarious employment. Instead, we propose institutional change is the most plausible explanation. In addition to reunification and major social policy and labor market reforms, we highlight the dramatic decline of unionization among German workers. We conclude that while there are elements of stability to the German coordinated market economy, Germany increasingly exhibits substantial dualization, liberalization, inequality, and precarity.

The chapter elaborates a critical theoretical narrative about the political economy of European capitalism. It illustrates how precariousness has been exacerbated by the impact of the global financial crisis and the emergence of a new system of European governance. Theoretical accounts in the sociology of work and labor studies have demonstrated the complexity of the outcomes and widely discussed the role of national labor market institutions and employment policies and practices, political ideology, and cultural frameworks impinging upon precarious work as a multidimensional concept. The chapter’s core concern is to illustrate how shifts in power resources, and particularly the weakening and deinstitutionalization of organized labor relative to capital, has acted as a central social condition that has brought about precariousness during the years leading up to and following the 2007–2008 crisis. In so doing, the chapter aims to overcome the existing theoretical accounts of precariousness which have often been limited by one or another variant of “methodological nationalism,” thereby exploring the transnational apparatuses that are emerging across national economies to date, and which impinge upon the structures and experiences that workers exhibit in an age of growing marketization.