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Unemployment, Labour Market Institutions and Shocks

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Author Info
Luca Nunziata () (Nuffield College, Oxford)

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Abstract

This paper aims to explain the cross sectional differences in, and the time series evolution of, OECD unemployment from 1960 to 1995. We want to know how much of it can be accounted for by changes in labour market institutions, and the interactions of institutions and macroeconomic shocks. Our aim is also to verify the consistency of unemployment fluctuations with the labour cost results presented in Nunziata (2001). Our findings suggest that labour market institutions have a direct significant impact on unemployment in a fashion that is broadly consistent with their impact on real labour costs. Broad movements in unemployment across the OECD can be explained by shifts in labour market institutions, although this explanation relies on high levels of endogenous persistence. We cannot rule out a significant role for institutions through their interaction with adverse shocks, although the estimates do not appear extremely robust in this case. In contrast, the direct effect of institutions still holds when we include the possibility of interactions between shocks and institutions.

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Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2002-W16.

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Length: 40 pages
Date of creation: 11 Jun 2002
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Handle: RePEc:nuf:econwp:0216

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Web page: http://www.nuff.ox.ac.uk/economics/

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  5. 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 40, Tilburg University, Center for Economic Research. [Downloadable!]
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  6. Belot, Michele & van Ours, Jan C., 2001. "Unemployment and Labor Market Institutions: An Empirical Analysis," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 403-418, December. [Downloadable!] (restricted)
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  13. Luca Nunziata & Stefano Staffolani, 2001. "On Short-Term Contracts Regulations," Economics Papers 2001-W7, Economics Group, Nuffield College, University of Oxford. [Downloadable!]
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  14. McElroy, Marjorie B., 1977. "Weaker MSE criteria and tests for linear restrictions in regression models with non-spherical disturbances," Journal of Econometrics, Elsevier, vol. 6(3), pages 389-394, November. [Downloadable!] (restricted)
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  17. Nickell, Stephen, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer. [Downloadable!] (restricted)
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  1. Monastiriotis, Vassilis, 2006. "Macro-determinants of UK regional unemployment and the role of employment flexibility," MPRA Paper 44, University Library of Munich, Germany. [Downloadable!]
  2. Kangni Kpodar, 2007. "Why has Unemployment in Algeria been higher than in MENA and Transition Countries," IMF Working Papers 07/210, International Monetary Fund. [Downloadable!]
  3. Antonello D’Agostino & Roberta Serafini & Melanie Ward-Warmedinger, 2006. "Sectoral explanations of employment in Europe - the role of services," Working Paper Series 625, European Central Bank. [Downloadable!]
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  4. Felix Reichling, 2005. "Retraining the Unemployed in a Matching Model with Turbulence," Macroeconomics 0506012, EconWPA. [Downloadable!]
  5. den Haan, Wouter J. & Haefke, Christian & Ramey, Garey, 2004. "Turbulence and Unemployment in a Job Matching Model," IZA Discussion Papers 1403, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584_v1, HAL. [Downloadable!]
  7. Véronique Genre & Ramón Gómez Salvador & Ana Lamo, 2005. "European women - why do(n’t) they work?," Working Paper Series 454, European Central Bank. [Downloadable!]
  8. Kåre Johansen & Ørjan Mydland & Bjarne Strøm, 2007. "Politics in wage setting: does government colour matter?," Economics of Governance, Springer, vol. 8(2), pages 95-109, February. [Downloadable!] (restricted)
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