The Structure of the Labor Market in Institutional Economics
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Publish date: 2013-09-30
Gospodarka Narodowa 2013;266(9):5–27
The article focuses on the institutional structure of the labor market as seen through the lens of institutional economics. Institutional economics assumes that there is an interaction between people and organizations and examines the rules of this interaction. It argues that economic analysis should be interdisciplinary and focus on social, cultural, political and historical aspects. This is especially important for the analysis of the modern labor market, where cultural factors play a major role, the author says. These theoretical findings combined with the current situation on the labor market lead the author to formulate an assumption that labor market studies failing to take into account formal and informal institutions may result in an incomplete picture of the labor market. That is why the main objective of the article is to define the institutional structure of the labor market, the author says. The paper presents the assumptions of institutional economics, describes the institutional approach used in labor market studies, and defines the concept of labor market institutions. The author discusses the structure of the labor market by referring to the concept of different levels of economic analysis developed by O.E. Williamson, a proponent of new institutional economics. Using Williamson’s findings, Woźniak-Jęchorek sets out to identify relationships between different levels of economic analysis in the context of labor market functioning. The proposed theoretical model introduces the concept of the social value of work, assuming that informal and formal institutions influence the perception of the value of work and determine the behavior of people on the labor market. The value of work is evaluated from different angles, including an economic perspective (individuals have to work to earn money for a living), a social perspective (individuals need social interaction and integration), and a task-based perspective (individuals need to achieve objectives by completing tasks). Each perspective determines the behavior of people on the labor market. In classical terms, the value of work is reflected in wage disparities, but today there is a growing need for a mixed approach combining economic, social, and ecological values, Woźniak-Jęchorek says. Defining the institutional structure of the labor market is a starting point for further empirical research that could contribute to a more effective government policy toward the labor market, the author concludes.