Do labor market rigidities matter for business cycles? Yes they do
AbstractWe study whether labor market institutions affect the volatility and correlations of macroeconomic variables for a sample of 20 OECD countries. Labor market rigidities are characterized with a number of indicators; volatilities and correlations are computed in several ways. Union coverage and replacement ratios in the first year of unemployment are the labor market rigidities that most significantly affect business cycle statistics. Active labor market policies are effective in reducing unemployment volatility in countries with heavily regulated labor markets.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 411.
Date of creation: Jul 2009
Date of revision:
Labor market institutions; Business cycles; OECD countries; rank sum test; active labor market policies;
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
- J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
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