ABSTRACT
The economic performance of the OECD countries varied substantially over the 1970s, the 1980s and the first half of the 1990s, both in the performance's time series and the cross-sectional dimension. Hypotheses about the possible impact of institutional arrangements on labor market performance may be described by two extremes. On one hand, the 'eurosclerosis' view implies that non-market institutions and regulations are rigidities that hurt economic performance. On the other hand, the 'corporatist' view argues that institutional arrangements exist to overcome various market failures and may therefore improve economic performance. It is difficult to accurately assess the impact of corporatist institutions on measures of productive efficiency, because of the problems to specify their interactions, the difficulties to measure the various aspects of wage bargaining systems and the need to consider additional conditioning factors, which the theory often neglects. Productive inefficiencies deriving from wage rises or rigidities in employment conditions will affect employment in the industry less.
