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Labor Market Flexibility and Unemployment: New Empirical Evidence of Static and Dynamic Effects

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Author Info

  • Lorenzo E Bernal-Verdugo

    ()
    (University of Chicago, 1126 E. 59th Street, Chicago, IL 60637, USA.)

  • Davide Furceri

    (International Monetary Fund and University of Palermo, IMF, 700 19th Street, NW, Washington DC 20431, USA. E-mails: dfurceri@IMF.org, furceri@economia.unipa.it)

  • Dominique Guillaume

    ()
    (International Monetary Fund, 700 19th Street NW, 20431 Washington DC, USA.)

Abstract

The aim of this paper is to analyze the relationship between labor market flexibility and unemployment outcomes. Using a panel of 97 countries from 1985 to 2008, the results of the paper suggest that improvements in labor market flexibility have a statistically and significant negative impact on unemployment outcomes (over unemployment, youth unemployment, and long-term unemployment). Among the different labor market flexibility indicators analyzed, hiring and firing regulations and hiring costs are found to have the strongest effect.

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Comparative Economic Studies.

Volume (Year): 54 (2012)
Issue (Month): 2 (June)
Pages: 251-273

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Handle: RePEc:pal:compes:v:54:y:2012:i:2:p:251-273

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References

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  1. Andrea Bassanini & Romain Duval, 2009. "Unemployment, institutions and reform complementarities: Re-assessing the aggregate evidence for OECD countries," Post-Print halshs-00395144, HAL.
  2. Horst Feldmann, 2006. "Government Size and Unemployment: Evidence from Industrial Countries," Public Choice, Springer, vol. 127(3), pages 443-459, June.
  3. Michèle Belot & Jan C. van Ours, 2004. "Does the recent success of some OECD countries in lowering their unemployment rates lie in the clever design of their labor market reforms?," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 621-642, October.
  4. Andrea Bassanini & Romain Duval, 2006. "Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions," OECD Social, Employment and Migration Working Papers 35, OECD Publishing.
  5. Luc Laeven & Fabian Valencia, 2010. "Resolution of Banking Crises: The Good, the Bad, and the Ugly," IMF Working Papers 10/146, International Monetary Fund.
  6. Feldmann, Horst, 2009. "The unemployment effects of labor regulation around the world," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 76-90, March.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. La dérégulation du marché du travail est-elle une solution au chômage ?
    by ? in D'un champ l'autre on 2014-04-26 13:10:00
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Cited by:
  1. Josef C Brada & Marcello Signorelli, 2012. "Comparing Labor Market Performance: Some Stylized Facts and Key Findings," Comparative Economic Studies, Palgrave Macmillan, vol. 54(2), pages 231-250, June.
  2. Alberto Behar & Junghwan Mok, 2013. "Does Public-Sector Employment Fully Crowd Out Private-Sector Employment?," CSAE Working Paper Series 2013-20, Centre for the Study of African Economies, University of Oxford.
  3. International Labour Office, 2012. "Global employment trends for youth : 2012," Global Employment Trends Reports 480201, International Labour Office, Economic and Labour Market Analysis Department.
  4. Sotirios Theodoropoulos, 2011. "A Wage Policy for External Balance and Employment in EMU Environment: A Theoretical Approach," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 61(3-4), pages 85-102, July - De.
  5. Bernal-Verdugo, Lorenzo E. & Furceri, Davide & Guillaume, Dominique, 2013. "Banking crises, labor reforms, and unemployment," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1202-1219.
  6. Giovanni S.F. Bruno & Misbah T. Choudhry & Enrico Marelli & Marcello Signorelli, 2014. "Youth Unemployment: Key Determinants and the Impact of Crisis," AIEL Series in Labour Economics, in: Dario Sciulli & Miguel Ángel Malo (ed.), Disadvantaged Workers, edition 1, chapter 7, pages 121-148 AIEL - Associazione Italiana Economisti del Lavoro.
  7. Richter, Kaspar & Witkowski, Bartosz, 2014. "Does growth generate jobs in Eastern Europe and Central Asia ?," Policy Research Working Paper Series 6759, The World Bank.
  8. Davide Furceri & Ernesto Crivelli & Joël Toujas-Bernate, 2012. "Can Policies Affect Employment Intensity of Growth? A Cross-Country Analysis," IMF Working Papers 12/218, International Monetary Fund.
  9. Davide Furceri, 2012. "Unemployment and Labor Market Issues in Algeria," IMF Working Papers 12/99, International Monetary Fund.
  10. Davide Furceri & Lorenzo E. Bernal-Verdugo & Dominique M. Guillaume, 2012. "Crises, Labor Market Policy, and Unemployment," IMF Working Papers 12/65, International Monetary Fund.

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