How does Finance Affect Labor Market Institutions? An Empirical Analysis in 16 OECD Countries
Résumé
This article focuses on the impact of the process of financialization on two central labor market institutions, workers’ bargaining power and employment protection legislation, in 16 OECD countries from 1970 to 2009. Financialization is described as a finance-led regime of accumulation and as the emergence of a shareholder value maximization strategy. Using various mechanisms at the micro and macro levels, empirical work has investigated the relationship between the type of financial relations and the agents’ capacities of maintaining strong encompassing labor market
institutions. I argue that the process of financialization will exert strong pressures on labor markets toward more eroded/decentralized bargaining institutions and more flexible employment relations. This article proposes an updated indicator of workers’ bargaining power and various measures of financialization. Using panel data models, our main results point out that increased financialization is clearly associated with a reduction in workers’ bargaining power and in the strictness of employment protection.