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Why Labor Market Response Differed in the Great Recession: The Impact of Institutions and Policy

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Author Info

  • Karl Aiginger

    ()
    (Austrian Institute of Economic Research (WIFO))

  • Thomas Horvath

    ()
    (Austrian Institute of Economic Research (WIFO))

  • Helmut Mahringer

    ()
    (Austrian Institute of Economic Research (WIFO))

Abstract

This paper investigates the performance of labor markets during the recent crisis for 28 industrialized countries, specifically the reaction of employment and unemployment indicators relative to output changes.We construct a composite indicator for output as well as labor market performance. The determinants of cross-country differences we chose are regulation, flexicurity elements and contracts. We find robust positive impact from labor market regulation, while the impact of flexicurity strategies and contracts are difficult to pin down econometrically. Finally, we venture a tentative look at the ongoing recovery.

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File URL: http://www.eaco.eu/documents/issue/aiginger_k_et_al.pdf
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Bibliographic Info

Article provided by European Association Comenius - EACO in its journal DANUBE: Law and Economics Review.

Volume (Year): (2012)
Issue (Month): 3 (September)
Pages: 1-19

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Handle: RePEc:cmn:journl:y:2012:i:3:p:1-19

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Web page: http://www.eaco.eu

Related research

Keywords: Financial Crisis; Great Recession; Labor Market; Short-TimeWork Agreements; Flexicurity; Okun’s Law;

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References

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  1. Berkmen, S. Pelin & Gelos, Gaston & Rennhack, Robert & Walsh, James P., 2012. "The global financial crisis: Explaining cross-country differences in the output impact," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 42-59.
  2. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," NBER Working Papers 14656, National Bureau of Economic Research, Inc.
  3. Richard Layard & Stephen Nickell, 1998. "Labour Market Institutions and Economic Performance," CEP Discussion Papers dp0407, Centre for Economic Performance, LSE.
  4. Jean-Claude Barbier & Fabrice Colomb & Per Kongshøj Madsen, 2009. "Flexicurity - an open method of coordination, at the national level ?," Documents de travail du Centre d'Economie de la Sorbonne 09046, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  5. Howell David R. & Baker Dean & Glyn Andrew & Schmitt John, 2007. "Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence," Capitalism and Society, De Gruyter, vol. 2(1), pages 1-73, May.
  6. Karl Aiginger, 2009. "Strengthening the resilience of an economy," Intereconomics: Review of European Economic Policy, Springer, vol. 44(5), pages 309-316, September.
  7. Philip Lane & Gian Maria Milesi-Ferretti, 2010. "The Cross-Country Incidence of the Global Crisis," The Institute for International Integration Studies Discussion Paper Series iiisdp333, IIIS.
  8. Antonio Spilimbergo & Steven A. Symansky & Carlo Cottarelli & Olivier J. Blanchard, 2009. "Fiscal Policy for the Crisis," IMF Staff Position Notes 2008/01, International Monetary Fund.
    • Antonio Spilimbergo & Steve Symansky & Olivier Blanchard & Carlo Cottarelli, 2009. "Fiscal Policy For The Crisis," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 10(2), pages 26-32, 07.
  9. John Martin & Stefano Scarpetta, 2012. "Setting It Right: Employment Protection, Labour Reallocation and Productivity," De Economist, Springer, vol. 160(2), pages 89-116, June.
  10. Karl Aiginger, 2010. "Post Crisis Policy: Some Reflections of a Keynesian Economist," WIFO Working Papers 371, WIFO.
  11. AIGINGER Karl, 2011. "Why Performance Differed Across Countries In The Recent Crisis," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 55(2), pages 20-27.
  12. Aiginger, Karl, 2010. "The Great Recession versus the Great Depression: stylized facts on siblings that were given different foster parents," Economics Discussion Papers 2010-9, Kiel Institute for the World Economy.
  13. Stijn Claessens & Giovanni Dell'Ariccia & Deniz Igan & Luc Laeven, 2010. "Cross-country experiences and policy implications from the global financial crisis," Economic Policy, CEPR & CES & MSH, vol. 25, pages 267-293, 04.
  14. Franz Traxler, 2003. "Bargaining (De)centralization, Macroeconomic Performance and Control over the Employment Relationship," British Journal of Industrial Relations, London School of Economics, vol. 41(1), pages 1-27, 03.
  15. Karl Aiginger, 2011. "Why Performance Differed Across Countries in the Recent Crisis. How Country Performance in the Recent Crisis Depended on Pre-crisis Conditions," WIFO Working Papers 387, WIFO.
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Cited by:
  1. Christine Erhel & Charlotte Levionnois, 2013. "Labour Market Policies in Times of Crisis: A Comparison of the 1992-1993 and 2008-2010 Recessions," Documents de travail du Centre d'Economie de la Sorbonne 13060, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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