Kiel Working Papers, Kiel Institute for World Economics
No 982:
The Positive Economics of Corporatism and Corporate Governance
Rainer Fehn and Carsten-Patrick Meier
Abstract: This paper presents a positive model which shows that
institutional setups on capital and labor markets might be intertwined by
politicoeconomic forces. Two politicoeconomic equilibria arise from our
model, one with little protection of insiders on capital and labor markets,
and another one with an institutional bias toward favoring insiders on both
markets. Coherent and relatively homogeneous societies, where binding
commitments enjoy greater feasability, are more likely to be found in the
latter, corporatist equilibrium, whereas fragmented, heterogeneous
Anglo-Saxon societies fit better into the former category. These
predictions of the model receive considerable support in our cross-country
empirical analysis, thus being potentially important for the current
debates concerning the reforms of labor markets and of corporate governance
systems.
Keywords: Corporatism, Labor Markets, Corporate Governance, Political Economy, Shareholder Protection; (follow links to similar papers)
JEL-Codes: G34; K22; K42; (follow links to similar papers)
30 pages, May 2000
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