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Labour Market Institutions and Unemployment: does Finance Matter?

  • Christophe Rault

    ()

    (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR6221 - Université d'Orléans, CESifo - Center for Economic Studies and Ifo for Economic Research - CESifo Group Munich)

  • Anne-Gaël Vaubourg

    ()

    (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR6221 - Université d'Orléans)

We explore whether finance influences the impact of labour market institutions on unemployment. Using a data set of 18 OECD countries over 1980-2004, we estimate a panel Vector AutoRegressive model. We check whether causalities from labour market variables (labour market regulation, union density, coordination in wage bargaining) to unemployment are a ffected by the introduction of financial factors (stock market capitalisation, intermediated credit and banking concentration) in the estimation. In Australia, Belgium, Italy, Japan and Spain, accounting for financial indicators mitigates the bene fits of labour market flexibilization or makes it harmful to employment. In Austria, Canada, Finland and Portugal, it reduces its detrimental impact or makes it bene ficial. In Ireland and Netherlands, both e ffects prevail, depending on the labour market indicator used.

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Paper provided by HAL in its series Working Papers with number halshs-00833452.

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Date of creation: 12 Jun 2013
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Handle: RePEc:hal:wpaper:halshs-00833452
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  1. Rainer Fehn & Thomas Fuchs, 2003. "Capital Market Institutions and Venture Capital: Do They Affect Unemployment and Labour Demand?," CESifo Working Paper Series 898, CESifo Group Munich.
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