Labour market institutions still matter for workforce equality in the knowledge economy

The latter decades of the 20th century saw the rise of the so called ‘knowledge economy’ in Europe, with service sectors such as finance and telecommunications coming to dominate national economies. But these changes also occurred alongside a growth in income inequality across advanced democracies.

As David Hope and Angelo Martelli highlight, many observers have assumed that the transition to the knowledge economy had weakened the ability of labour market institutions, such as coordinated wage setting and employment protection legislation, to combat inequality. However, drawing on a new study*, they illustrate that labour market institutions still retain the capacity to shelter workers from structural changes in the economy, including the continued shift of workers into high-value added service sectors.

* The transition to the knowledge economy, labour market
institutions, and income inequality in advanced democracies (LSE International Inequalities Institute: Working Paper, No.18, November 2017)

LSE International Inequalities Institute: Working Paper, No.18, November 2017: The transition to the knowledge economy, labour market institutions, and income inequality in advanced democracies http://www.lse.ac.uk/International-Inequalities/Assets/Documents/Working-Papers/III-Working-Paper-18-The-transition-to-the-knowledge-economy-labour-market-institutions-and-income-inequality-in-advanced-democracies.pdf

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