Chapter

The Constituency Effect

Gilles Saint‐Paul

in The Political Economy of Labour Market Institutions

Published in print September 2000 | ISBN: 9780198293323
Published online November 2003 | e-ISBN: 9780191596841 | DOI: http://dx.doi.org/10.1093/0198293321.003.0007
 The Constituency Effect

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This chapter discusses the constituency effect. By this, it is meant that when a labour market institution is in place, it creates its own political support. This in turn generates status‐quo bias and resistance to reform. The effect is illustrated in the case of employment protection. Other applications include the role of initial conditions and of pre‐announcing the reform.

Keywords: constituency effect; initial conditions; labour reallocation; path dependence; reform; reform preannouncemement; status‐quo bias

Chapter.  15943 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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