Comparative Analysis of the Explanation of Labor Market Institutions from the Perspective of Neoclassicists and Institutionalists: guidelines for labor market policies

Abstract

The decisive role of the labor market as one of the areas of distribution of production inputs on the one hand, and the emphasis on the dignity and importance of human labor as drivers of social development, on the other hand, are of great importance to this market. Contrary to the neoclassical view of the labor market, which is largely the result of some kind of homogeneity between the rules governing this market and other markets, institutionalists provide a distinct analysis and explanation of this market by emphasizing the important labor market institutions. The different paths that eventually lead to the fundamental differences in the direction of designing labor market interactions. The difference between the institutionalist and neoclassical approaches provides new insights into labor market analysis. In presenting these new insights, this paper deals with the five institutions of labor unions and collective bargaining, minimum wage, employment protection, compulsory benefits, and the creation of a system of skills and education from an institutionalist perspective and its impact on the labor market variables has been assessed. Institutions that change performance in a functioning market structure and provide new insights into the structure and dynamics of the labor market for analysts. Finally, important differences between the neoclassical tradition and institutionalism in analyzing the structure of the specific labor market and guiding labor market policies are presented.

Keywords

• labor market
• institutional analysis
• neoclassical approach
• labor market institutions
• firm theory
• transaction theory