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Employment Growth and Labour Market Flexibility in OECD Countries

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  • Kiander, Jaakko
  • Virén, Matti

Abstract

This paper investigates the adjustment of employment to population shocks in 22 OECD countries over the period 1960 - 1997. Most of the countries have experienced significant population shocks during that period. The speed of adjustment parameter is used as a measure of the functioning of the labour market. If the OECD countries are compared using this measure, it turns out that the Anglo Saxon countries clearly outperform the other (European) countries in terms of labour market adjustment. In the case of the Nordic countries, the results presented are the most extreme. In practically all countries, the functioning of the labour market seems to have deteriorated over time. These observations seem to be helpful in explaining for behaviour of unemployment rates in the OECD area. It also turns out that there are inter-country differences in how population shocks affect open unemployment. In most countries unemployment has increased after the population growth has slowed.

Suggested Citation

  • Kiander, Jaakko & Virén, Matti, 1998. "Employment Growth and Labour Market Flexibility in OECD Countries," Discussion Papers 184, VATT Institute for Economic Research.
    • Handle: RePEc:fer:dpaper:184
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    File URL: https://www.doria.fi/handle/10024/148465
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    References listed on IDEAS

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    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, Decembrie.
    2. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084, Elsevier.
    3. Alan B. Krueger & Jorn-Steffen Pischke, 1997. "Observations and Conjectures on the U.S. Employment Miracle," NBER Working Papers 6146, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Virén, Matti, 2000. "Cross-country Evidence on a Nonlinear Okun Curve," Discussion Papers 239, VATT Institute for Economic Research.
    2. Viren, Matti, 2001. "The Okun curve is non-linear," Economics Letters, Elsevier, vol. 70(2), pages 253-257, February.

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