The Impact of Labor Market Institutions on Labor Market Performance… in Transition Countries
The Impact of Labor Market Institutions on Labor Market Performance… in Transition Countries

Summary/Abstract: The goal of this study is to analyze the influence of labor market institutions on labor market performance in 25 post-socialist countries during the transition period and to determine whether this influence was the same as in the EU-15 countries. The collected data indicate that labor market institutions in transition countries (especially in CIS) ensure rather higher level of flexibility of the labor market as compared to the institutions in the EU-15 economies. Moreover, the Chow tests show that the influence of labor market institutions on some indicators of labor market outcomes is significantly different in the transition countries and in the EU-15 countries. Furthermore, the exclusion of country fixed effects allowed us to find that only two labor market institution indicators, i.e.: the EPL index and the expenditure on ALMP, have significant influence on labor market outcomes in transition countries. The rise of the EPL index results in higher unemployment among young and the least-educated people and leads to a decrease in the employment to population ratio, whereas the ALMP helps in reducing the unemployment rate.

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