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

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  • Elisa Gamberoni
  • Erik Von Uexkull
  • Sebastian Weber

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

Paper provided by The World Bank in its series World Bank Other Operational Studies with number 10155.

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Date of creation: Sep 2010
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Handle: RePEc:wbk:wboper:10155

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Keywords: Social Protections and Labor - Labor Markets Social Protections and Labor - Labor Policies Social Protections and Labor - Labor Management and Relations Social Protections and Labor - Labor Standards Poverty Reduction - Achieving Shared Growth;

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

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