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

Author

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  • Gamberoni, Elisa

    (World Bank)

  • Von Uexkull, Erik

    (International Labour Office)

  • Weber, Sebastian

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.

Suggested Citation

  • Gamberoni, Elisa & Von Uexkull, Erik & Weber, Sebastian, 2010. "The Roles of Openness and Labor Market Institutions for Employment Dynamics during Economic Crises," World Bank - Economic Premise, The World Bank, issue 29, pages 1-5, August.
    • Handle: RePEc:wbk:prmecp:ep29
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    2. Junankar, Pramod N. (Raja), 2011. "The Global Economic Crisis: Long-Term Unemployment in the OECD," IZA Discussion Papers 6057, Institute of Labor Economics (IZA).
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    5. Blerta Haliti Baruti, 2016. "Global Economic Crisis and Its Reflection in Kosovo Financial System," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 5, November.

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    More about this item

    Keywords

    openness; labor; labor market; employment; crisis; integration; debt; banking; unemployment; recovery; severance pay;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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