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The Roles of Openness and Labor Market Institutions for Employment Dynamics during Economic Crises

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  • Gamberoni, Elisa

    ()
    (World Bank)

  • Von Uexkull, Erik

    (International Labour Office)

  • Weber, Sebastian

Abstract

Employment effects of the recent global economic crisis have differed significantly across countries. An active public debate currently focuses on external shocks and the role of labor market policies as a driver of those differences. In this note, we analyze the roles of integration into the global economy and different labor market institutions during different phases of past global economic downturns and domestic banking and debt crises. We find that domestic debt and banking crises were much more severe in their impact on employment than were global economic downturns. On average, the reduction in employment growth was more than twice as strong. We also find that openness to trade has both deepened the contractionary effects on employment and allowed for a faster recovery. High severance pay dampened the employment effect in both domestic crises and global economic downturns, whereas very high unemployment benefits were associated with stronger reductions in employment growth.

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Bibliographic Info

Article provided by The World Bank in its journal Economic Premise.

Volume (Year): (2010)
Issue (Month): 29 (August)
Pages: 1-5

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Handle: RePEc:wbk:prmecp:ep29

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Keywords: openness; labor; labor market; employment; crisis; integration; debt; banking; unemployment; recovery; severance pay;

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Cited by:
  1. Junankar, Pramod N. (Raja), 2011. "The Global Economic Crisis: Long-Term Unemployment in the OECD," IZA Discussion Papers 6057, Institute for the Study of Labor (IZA).
  2. Sentance, Andrew & Taylor, Mark P. & Wieladek, Tomasz, 2012. "How the UK economy weathered the financial storm," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 102-123.
  3. World Bank, 2011. "Challenges to Enterprise Performance in the Face of the Financial Crisis : Eastern Europe and Central Asia," World Bank Publications, The World Bank, number 2316, August.

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