Labour market regimes and unemployment in OECD countries
AbstractUntil now there exists no consensus view on the determinants of unemployment. Whereas some empirical papers find that mainly labour market institutions explain unemployment, others argue that this correlation is not robust. One explanation for these contradictory results is that labour market institutions affect unemployment in varying labour market regimes differently. Due to institutional complementarities and a trade-off between external and internal flexibility, certain labour market institutions show different impacts on unemployment depending on the general institutional arrangement. Support for this is found when testing for the impact of labour market institutions on unemployment in different labour market regimes with panel data for 20 OECD countries in the period 1982 to 2003. While external labour market flexibility shows the expected impact on unemployment in some countries, this is not the case in corporatist countries, which are characterised by high internal flexibility and good labour relations. Taking account of the regime is therefore crucial for successful labour market policy. Additionally, high real interest rates and restrictive monetary and fiscal policy in downturns are found to increase unemployment, suggesting that policy makers should react actively to economic downturns.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute in its series IMK Working Paper with number 6-2011.
Length: 19 pages
Date of creation: 2011
Date of revision:
Find related papers by JEL classification:
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- H1 - Public Economics - - Structure and Scope of Government
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-15 (All new papers)
- NEP-CWA-2012-05-15 (Central & Western Asia)
- NEP-LAB-2012-05-15 (Labour Economics)
- NEP-MAC-2012-05-15 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Werner Eichhorst & Michael Feil & Paul Marx, 2010.
"Crisis, What Crisis? Patterns of Adaptation in European Labor Markets,"
Applied Economics Quarterly (formerly: Konjunkturpolitik),
Duncker & Humblot, Berlin, vol. 61(Supplemen), pages 29-64.
- Eichhorst, Werner & Feil, Michael & Marx, Paul, 2010. "Crisis, What Crisis? Patterns of Adaptation in European Labor Markets," IZA Discussion Papers 5045, Institute for the Study of Labor (IZA).
- Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147, September.
- Olivier Blanchard & Lawrence F. Katz, 1996.
"What We Know and Do Not Know About the Natural Rate of Unemployment,"
NBER Working Papers
5822, National Bureau of Economic Research, Inc.
- Olivier Blanchard & Lawrence F. Katz, 1997. "What We Know and Do Not Know about the Natural Rate of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 51-72, Winter.
- Blanchard, O & Katz, L, 1996. "What We Know and Do Not Know about the Natural Rate of Unemployment," Working papers 96-29, Massachusetts Institute of Technology (MIT), Department of Economics.
- C Bean, 1992.
"European Unemployment: A Survey,"
CEP Discussion Papers
dp0071, Centre for Economic Performance, LSE.
- David R. Howell & Miriam Rehm, 2009.
"Unemployment compensation and high European unemployment: a reassessment with new benefit indicators,"
Oxford Review of Economic Policy,
Oxford University Press, vol. 25(1), pages 60-93, Spring.
- David R. Howell & Miriam Rehm, 2009. "Unemployment Compensation and High European Unemployment: A Reassessment with New Benefit Indicators," Working Papers wp201, Political Economy Research Institute, University of Massachusetts at Amherst.
- Belot, Michèle & van Ours, Jan C., 2000.
"Does the Recent Success of Some OECD Countries in Lowering their Unemployment Rates Lie in the Clever Design of their Labour Market Reform?,"
IZA Discussion Papers
147, Institute for the Study of Labor (IZA).
- 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.
- Belot, M.V.K. & Ours, J.C. van, 2000. "Does the Recent Success of some OECD Countries in Lowering their Unemployment Rates lie in the Clever Design of their Labour Market Reforms?," Discussion Paper 2000-40, Tilburg University, Center for Economic Research.
- Belot, Michèle & van Ours, Jan C, 2000. "Does the Recent Success of some OECD Countries in Lowering their Unemployment Rates lie in the Clever Design of their Labour Market Reforms?," CEPR Discussion Papers 2492, C.E.P.R. Discussion Papers.
- Olivier Blanchard & Thomas Philippon, 2004. "The Quality of Labor Relations and Unemployment," NBER Working Papers 10590, National Bureau of Economic Research, Inc.
- Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, 01.
- Engelbert Stockhammer & Simon Sturn, 2008.
"The Impact of Monetary Policy on Unemployment Hysteresis,"
IMK Working Paper
15-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Engelbert Stockhammer & Simon Sturn, 2012. "The impact of monetary policy on unemployment hysteresis," Applied Economics, Taylor & Francis Journals, vol. 44(21), pages 2743-2756, July.
- Baker, Dean & Glyn, Andrew & Howell, David & Schmitt, John, 2004. "Unemployment and labour market institutions : the failure of the empirical case for deregulation," ILO Working Papers 374124, International Labour Organization.
- Andrea Bassanini & Romain Duval, 2006. "The determinants of unemployment across OECD countries: Reassessing the role of policies and institutions," OECD Economic Studies, OECD Publishing, vol. 2006(1), pages 7-86.
- Alexander Herzog-Stein & Fabian Lindner & Simon Sturn & Till van Treeck, 2010. "From a source of weakness to a tower of strength?," IMK Report 56e-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Laurence Ball, 1999. "Aggregate demand and Long-Run Unemployment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(2), pages 189-252.
- Andrea Bassanini & Romain Duval, 2009.
"Unemployment, institutions and reform complementarities: Re-assessing the aggregate evidence for OECD countries,"
- Andrea Bassanini & Romain Duval, 2009. "Unemployment, institutions, and reform complementarities: re-assessing the aggregate evidence for OECD countries," Oxford Review of Economic Policy, Oxford University Press, vol. 25(1), pages 40-59, Spring.
- Lucio Baccaro, 2003. "What is Alive and What is Dead in the Theory of Corporatism," British Journal of Industrial Relations, London School of Economics, vol. 41(4), pages 683-706, December.
- Horst Feldmann, 2006. "The Quality of Industrial Relations and Labour Market Performance," LABOUR, CEIS, vol. 20(3), pages 559-579, 09.
- Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
- Christian Gianella & Isabell Koske & Elena Rusticelli & Olivier Chatal, 2008. "What Drives the NAIRU? Evidence from a Panel of OECD Countries," OECD Economics Department Working Papers 649, OECD Publishing.
- Bell, David N.F. & Blanchflower, David G., 2009. "What Should Be Done About Rising Unemployment in the OECD?," IZA Discussion Papers 4455, Institute for the Study of Labor (IZA).
- Anke Hassel, 2003. "The Politics of Social Pacts," British Journal of Industrial Relations, London School of Economics, vol. 41(4), pages 707-726, December.
- Ronald Schettkat & Rongrong Sun, 2009.
"Monetary policy and European unemployment,"
Oxford Review of Economic Policy,
Oxford University Press, vol. 25(1), pages 94-108, Spring.
- van Treeck, Till & Sturn, Simon, 2012. "Income inequality as a cause of the Great Recession? : A survey of current debates," ILO Working Papers 470934, International Labour Organization.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Nemitz).
If references are entirely missing, you can add them using this form.