The Journal of Socio-Economics 37 (2008) 1846–1855 Contents lists available at ScienceDirect The Journal of Socio-Economics journal homepage: www.elsevier.com/locate/soceco Labor market coordination systems and unemployment performance in some OECD countries Giuseppina Autiero ∗ Department of Economics and Statistics, University of Salerno, Via Ponte don Melillo, 84084 Fisciano, Salerno, Italy article info Article history: Received 27 April 2007 Received in revised form 11 February 2008 Accepted 6 April 2008 JEL classification: P5 C23 O57 J5 Keywords: Unemployment Institutions Coordination abstract In the view of comparative institutional analysis, economic systems are considered as coherent structures of interdependent institutions with a considerable explanatory power of economic performances. In this paper this approach is extended to the labor market. Differing from the current literature, we used as an enlarged set of institutional features to construct a synthetic indicator of the main institutional factors underlying different coordination systems. The systems range from non-market coordination to market-based coordination. Subsequently, the influence of coordination on unemployment was assessed through a time effect model based on panel data for 16 OECD countries for 5 periods from 1960 to 1995. The evidence shows that some of the institutional factors, which cause labor market rigidities and usually higher unemployment, may have the opposite effect when associated with a high coordination level. This is particularly true in the case of employment protection. © 2008 Elsevier Inc. All rights reserved. 1. Introduction Recently there has been a shift of interest from the influence of individual institutional factors to the effect of their complementarities on labor market performances. However, why should one be concerned with aggregate effects while for a long time the focus has been on disentangling the role of the single factors? The answer lies in the currently increasing awareness of the relevance of complementarities among institutions. The issue of the role of institutional complementarities in economic systems has already been raised and thoroughly studied in comparative institutional analysis by Aoki (2001), who stressed that economic systems are characterized by a coherent body of interdependent institutions, which requires a systemic approach when the impact of a specific institutional setting on a country’s economic performance has to be assessed. This approach has contributed to leading the way to a new strand of research on varieties of capitalism based on different types of coordination devices to allocate resources, ranging from market to other institutional organizations (Hall and Soskice, 2001; Hall and Gingerich, 2004). Thus, non- market coordination through specific organizational set-ups and institutional complementarities has become a matter of particular interest. The importance of institutional complementarities in labor market has lately been recognized (Elmeskov et al., 1998; Daveri and Tabellini, 2000). Belot and van Ours (2004) investigated the causal relations concerning some interactions between labor market institutions 1 and unemployment within the framework of a right to manage model, using annual ∗ Tel.: +39 089 962659; fax: +39 089 962049. E-mail address: pinaut@unisa.it. 1 The institutions considered are union bargaining power, firm monopoly power, the degree of union centralization, labor taxes, the unemployment benefit system and firing costs. 1053-5357/$ – see front matter © 2008 Elsevier Inc. All rights reserved. doi:10.1016/j.socec.2008.04.014