Working Paper: NBER ID: w12306
Authors: Richard B. Freeman
Abstract: The European Union and the United States operate different variants of market capitalism. The EU model uses social dialogue institutions to help determine economic outcomes, particularly in the labor market, whereas the US relies more on market forces. The theory of competitive markets provides a powerful framework for analyzing market driven economies and for assessing the conditions under which unfettered markets yield desirable outcomes. But there is no comparable framework for analyzing institution driven economies. This paper argues that models of efficient bargaining/the Coase Theorem offer the best framework for analyzing social dialogue economies and for identifying policies and institutional reforms to improve their functioning.
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JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| social dialogue institutions in the EU (F55) | stable and equitable economic outcomes (D63) |
| social dialogue institutions in the EU (F55) | wage stability (J31) |
| social dialogue institutions in the EU (F55) | employment security (J65) |
| collective bargaining in the EU (J52) | wage stability (J31) |
| collective bargaining in the EU (J52) | employment security (J65) |
| absence of institutional framework in the US (P16) | limited ability to achieve stable economic outcomes (P19) |
| efficient bargaining models (C79) | identify policies and institutional reforms (E69) |