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Episodes of unemployment reduction in rich, middle-income and transition economies

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  • Freund, Caroline
  • Rijkers, Bob

Abstract

This paper studies the incidence and determinants of episodes of drastic unemployment reduction, defined as swift, substantial, and sustained declines in unemployment. We identify 43 episodes over a period of nearly 3 decades in 94 rich, middle-income and transition countries. Unemployment reductions often coincide with an acceleration of growth and an improvement in macroeconomic conditions. Episodes are much more prevalent in countries with higher levels of unemployment and, given unemployment, are more likely in countries with better regulation. An efficient legal system that enforces contracts expeditiously is particularly important for reducing unemployment. The results imply that while employment is largely related to the business cycle, better regulation reduces likelihood of high unemployment and facilitates a more rapid recovery in the event unemployment builds up.

Suggested Citation

  • Freund, Caroline & Rijkers, Bob, 2014. "Episodes of unemployment reduction in rich, middle-income and transition economies," Journal of Comparative Economics, Elsevier, vol. 42(4), pages 907-923.
  • Handle: RePEc:eee:jcecon:v:42:y:2014:i:4:p:907-923
    DOI: 10.1016/j.jce.2014.04.009
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    References listed on IDEAS

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    Cited by:

    1. Y. Tamsamani, Yasser, 2018. "La mesure du chômage au Maroc : rien n’est moins sûr
      [Measuring unemployment in Morocco: a dubious approach]
      ," MPRA Paper 87161, University Library of Munich, Germany.
    2. Rijkers, Bob & Arouri, Hassen & Freund, Caroline & Nucifora, Antonio, 2014. "Which firms create the most jobs in developing countries? Evidence from Tunisia," Labour Economics, Elsevier, vol. 31(C), pages 84-102.
    3. Thomas Farole & Esteban Ferro & Veronica Michel Gutierrez, 2017. "Job Creation in the Private Sector," World Bank Other Operational Studies 28370, The World Bank.
    4. Amin, Mohammad & Djankov, Simeon, 2014. "Democratic institutions and regulatory reforms," Journal of Comparative Economics, Elsevier, vol. 42(4), pages 839-854.

    More about this item

    Keywords

    Unemployment; Labor markets; Regulation;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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