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Labor market institutions and macroeconomic volatility in a panel of OECD countries

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  • Scharler, Johann
  • Rumler, Fabio

Abstract

In this paper we analyse empirically how labour market institutions influence business cycle volatility in a sample of 20 OECD countries. Our results suggest that countries characterized by high union density tend to experience more volatile movements in output, whereas the degree of coordination of the wage bargaining system and strictness of employment protection legislation appear to play a limited role for output volatility. We also find some evidence suggesting that highly coordinated wage bargaining systems have a dampening impact on inflation volatility. JEL Classification: E31, E32

Suggested Citation

  • Scharler, Johann & Rumler, Fabio, 2009. "Labor market institutions and macroeconomic volatility in a panel of OECD countries," Working Paper Series 1005, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20091005
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    Cited by:

    1. Gnocchi, Stefano & Lagerborg, Andresa & Pappa, Evi, 2015. "Do labor market institutions matter for business cycles?," Journal of Economic Dynamics and Control, Elsevier, vol. 51(C), pages 299-317.
    2. Davide fiaschi & Lisa Gianmoena & Angela Parenti, 2013. "The Determinants of Growth Rate Volatility in European Regions," Discussion Papers 2013/170, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    3. Claire Loupias & Patrick Sevestre, 2013. "Costs, Demand, and Producer Price Changes," The Review of Economics and Statistics, MIT Press, pages 315-327.
    4. Fatih Macit, 2012. "Labor Market Institutions and Labor Productivity Growth," Economic Research Guardian, Weissberg Publishing, vol. 2(1), pages 121-128, May.
    5. Merkl, Christian & Schmitz, Tom, 2011. "Macroeconomic volatilities and the labor market: First results from the euro experiment," European Journal of Political Economy, Elsevier, pages 44-60.
    6. Georgiadis, Georgios, 2015. "Examining asymmetries in the transmission of monetary policy in the euro area: Evidence from a mixed cross-section global VAR model," European Economic Review, Elsevier, vol. 75(C), pages 195-215.
    7. Sumru Altug & Fabio Canova, 2014. "Do Institutions and Culture Matter for Business Cycles?," Open Economies Review, Springer, pages 93-122.
    8. Irene Brunetti & Davide fiaschi & Lisa Gianmoena, 2013. "An Index of Growth Rate Volatility: Methodology and an Application to European Regions," Discussion Papers 2013/169, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    9. Lochner, Benjamin, 2014. "Employment protection in dual labor markets: Any amplification of macroeconomic shocks?," FAU Discussion Papers in Economics 14/2014, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    10. Vadim Kufenko & Niels Geiger, 2016. "Business cycles in the economy and in economics: an econometric analysis," Scientometrics, Springer;Akadémiai Kiadó, pages 43-69.
    11. Stefano Gnocchi & Evi Pappa, "undated". "Do labor market rigidities matter for business cycles? Yes they do," Working Papers 411, Barcelona Graduate School of Economics.
    12. Mirdala, Rajmund & Svrčeková, Aneta, 2014. "Financial Integration, Volatility of Financial Flows and Macroeconomic Volatility," MPRA Paper 61845, University Library of Munich, Germany.
    13. Faccini, Renato & Rosazza Bondibene, Chiara, 2012. "Labour market institutions and unemployment volatility: evidence from OECD countries," Bank of England working papers 461, Bank of England.
    14. Sevgi Coskun, 2016. "Labor Market Fluctuations in Developing Countries," EcoMod2016 9732, EcoMod.
    15. repec:eee:labeco:v:48:y:2017:i:c:p:1-22 is not listed on IDEAS
    16. repec:spr:jbuscr:v:13:y:2017:i:2:d:10.1007_s41549-017-0018-5 is not listed on IDEAS

    More about this item

    Keywords

    business cycles; inflation; labor market institutions;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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