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Labor-Management Relations and Varieties of Capitalism

Author

Listed:
  • Schneider, Martin R.
Abstract
The varieties-of-capitalism (VoC) approach distinguishes liberal market economies (LMEs) such as the USA and coordinated market economies (CMEs) such as Germany based on institutional differences in terms of corporate governance, industrial relations, company relations as well as education and training. According to the VoC approach, firms differ in the ways in which they combine market and non-market mechanisms to coordinate their activities. Firms in LMEs are considered to rely more on market or exit mechanisms than firms in CMEs, which more often complement market with non-market or voice mechanisms. This chapter summarizes what has been learned from the VoC approach on the linkages between the institutional environment and labor-management relations. Various important lessons can be drawn. Employment protection legislation is a productive element within the institutional setup of CMEs. LMEs tend to induce strong overall wage dispersion, whereas in some CMEs such as Germany the labor market performance varies markedly by skill type and gender. The recent literature also indicates that the institutional setup is more complex than the VoC approach suggests, calling for revisions to the approach. In particular, some countries are hybrid economies that combine elements of both types of capitalism. The CME-LME dichotomy does not appreciate the true variety of country-specific skill systems. Finally, multinational enterprises overcome institutional boundaries of different types of capitalism in ways that were not included in the original VoC approach.

Suggested Citation

  • Schneider, Martin R., 2021. "Labor-Management Relations and Varieties of Capitalism," GLO Discussion Paper Series 934, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:934
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    File URL: https://www.econstor.eu/bitstream/10419/240929/1/GLO-DP-0934.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    varieties of capitalism; employment relationship; skill systems; employment protection;
    All these keywords.

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • P17 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Performance and Prospects

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