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Labor market reforms and unemployment fluctuations

Author

Listed:
  • Luca Bettarelli
  • omain Duval
  • Davide Furceri
  • João Jalles

Abstract

This article examines the role of unemployment benefits (UBs) and employment protection legislation (EPL) reforms in shaping the response of unemployment to output changes. Results—based on local projection estimates for an unbalanced sample of twenty-seven advanced economies during the period 1970–2019—suggest that reforms reducing the generosity of UB dampen the response of unemployment to output changes, while reforms reducing the stringency of EPL amplify it. Results are robust to a battery of robustness checks, including control for potential confounder effects and an instrumental variable approach to address endogeneity.

Suggested Citation

  • Luca Bettarelli & omain Duval & Davide Furceri & João Jalles, 2025. "Labor market reforms and unemployment fluctuations," Oxford Economic Papers, Oxford University Press, vol. 77(4), pages 919-937.
    • Handle: RePEc:oup:oxecpp:v:77:y:2025:i:4:p:919-937.
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    File URL: http://hdl.handle.net/10.1093/oep/gpaf007
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    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F19 - International Economics - - Trade - - - Other
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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