Formal regulation of employment in varieties of capitalism

Abstract

This paper analyses how the role of formal employment regulations (labour law) is described in the propositions of researchers who use the varieties of capitalism perspective (VoC). VoC is paradigmatic in comparative research on capitalism. The paper presents the different approaches to the role of regulations that intervene in the relations between employers and employees. Some researchers ignore formal employment regulations and focus on larger units of analysis. The next group of researchers is more focused on comparing systems of production in different states and concentrates on the economic function of labour law. Researchers who combine economic analyses with research on the welfare state treat employment regulation as a supplement or substitute for the instruments of the welfare state. Finally, research focused on the issue of institutional change tends to integrate both functional approaches and treats formal employment regulations from the point of view of institutional coherence, manifesting a specific, identified function. The paper argues that the conceptualization of the role of formal employment regulations depends on the way one understands the role of formal law and institutions within the economic order. Institutions can be seen either as a formal ‘superstructure’ that eases economic coordination, or as a manifestation of the will to limit the expansion of market logic.