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What really drives unemployment? A bayesian approach to determine the impact of institutions on the unemployment rate

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  • Andreas Sachs

    ()
    (Centre for European Economic Research)

Abstract

Labor and product market regulations affect the unemployment rate without a doubt. Econometricians, however, have yet to establish an unequivocal significance of this impact. The bayesian model averaging approach applied in this paper permits to unambiguously identify institutional indicators related to unemployment. For a panel of 17 countries, 24 years, and 19 institutional variables, eight indicators are identified as robust and significant determinants of unemployment, while the remaining eleven indicators are not related to the unemployment rate.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 32 (2012)
Issue (Month): 1 ()
Pages: 1008-1019

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Handle: RePEc:ebl:ecbull:eb-12-00144

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Keywords: Unemployment; Labor Market Institutions; Product Market Institutions; Bayesian Model Averaging; Model Averaging;

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References

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  12. Ley, Eduardo & Steel, Mark F.J., 2008. "On the Effect of Prior Assumptions in Bayesian Model Averaging with Applications to Growth Regression," MPRA Paper 6773, University Library of Munich, Germany, revised 06 Jan 2008.
  13. 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, De Gruyter, vol. 2(1), pages 1-73, May.
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