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Labor Market Institutions And Macroeconomic Volatility In A Panel Of Oecd Countries

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  • Fabio Rumler
  • Johann Scharler

Abstract

In this paper we analyze empirically how labor market institutions influence business cycle volatility in a sample of 20 OECD countries. Our results suggest that countries characterized by high union density tend to experience more volatile movements in output, whereas the degree of coordination of the wage bargaining system and strictness of employment protection legislation appear to play a limited role for output volatility. We also find some evidence suggesting that highly coordinated wage bargaining systems have a dampening impact on inflation volatility. JEL Classification: E31, E32

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Bibliographic Info

Article provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.

Volume (Year): 58 (2011)
Issue (Month): 3 (07)
Pages: 396-413

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Handle: RePEc:bla:scotjp:v:58:y:2011:i:3:p:396-413

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  1. Krause, Michael U. & Lubik, Thomas A., 2007. "The (ir)relevance of real wage rigidity in the New Keynesian model with search frictions," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 706-727, April.
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  4. Beck, Thorstein & Lundberg, Mattias & Majnoni, Giovanni, 2001. "Financial intermediary development and growth volatility : do intermediaries dampen or magnify shocks?," Policy Research Working Paper Series 2707, The World Bank.
  5. Nunziata, Luca, 2003. "Labour market institutions and the cyclical dynamics of employment," Labour Economics, Elsevier, vol. 10(1), pages 31-53, February.
  6. Clar, Miquel & Dreger, Christian & Ramos, Raul, 2007. "Wage Flexibility and Labour Market Institutions: A Meta-Analysis," IZA Discussion Papers 2581, Institute for the Study of Labor (IZA).
  7. Stephen Nickell & Luca Nunziata & Wolfgang Ochel & Glenda Quintini, 2001. "The Beveridge Curve, Unemployment and Wages in the OECD from the 1960s to the 1990s - Preliminary Version," CEP Discussion Papers dp0502, Centre for Economic Performance, LSE.
  8. Antonella Trigari, 2004. "Labour Market Search, Wage Bargaining and Inflation Dynamics," Working Papers 268, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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  18. Christoffel, Kai & Kuester, Keith & Linzert, Tobias, 2006. "Identifying the role of labor markets for monetary policy in an estimated DSGE model," CFS Working Paper Series 2007/07, Center for Financial Studies (CFS).
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Cited by:
  1. Christian Merkl & Tom Schmitz, 2009. "Macroeconomic Volatilities and the Labor Market: First Results from the Euro Experiment," Kiel Working Papers 1511, Kiel Institute for the World Economy.
  2. Macit, Fatih, 2011. "Labor Market Institutions and Labor Productivity Growth," MPRA Paper 31727, University Library of Munich, Germany.
  3. Abbritti, Mirko & Weber, Sebastian, 2010. "Labor market institutions and the business cycle Unemployment rigidities vs. real wage rigidities," Working Paper Series 1183, European Central Bank.
  4. Fatih Macit, 2010. "The Role of Labor Market Institutions on Wage and Inflation Dynamics: Empirical Evidence from OECD Economies," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 40(1), pages 64-77, March.
  5. Sumru Altug & Fabio Canova, 2012. "Do institutions and culture matter for business cycles?," Economics Working Papers 1314, Department of Economics and Business, Universitat Pompeu Fabra.
  6. Faccini, Renato & Rosazza Bondibene, Chiara, 2012. "Labour market institutions and unemployment volatility: evidence from OECD countries," Bank of England working papers 461, Bank of England.
  7. Stefano Gnocchi & Evi Pappa, 2009. "Do labor market rigidities matter for business cycles? Yes they do," Working Papers 411, Barcelona Graduate School of Economics.

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