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Labor Market Reforms and Unemployment Dynamics

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  • Fabrice Murtin

    (Organisation de Coopération et de Développement Économiques (OCDE))

  • Jean-Marc Robin

    (Département d'économie (ECON))

Abstract

We quantify the contribution of labor market reforms to unemployment dynamics in nine OECD countries (Australia, France, Germany, Japan, Portugal, Spain, Sweden, UK, US). We estimate a dynamic stochastic search-matching model with heterogeneous workers and aggregate productivity shocks. The heterogeneous-worker mechanism proposed by Robin (2011) explains unemployment volatility by productivity shocks well in all countries. Placement and employment services, UI benefit reduction and product market deregulation are found to be the most prominent policy levers for unemployment reduction. Business cycle shocks and LMPs explain about the same share of unemployment volatility (except for Japan, Portugal and the US).

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  • Fabrice Murtin & Jean-Marc Robin, 2018. "Labor Market Reforms and Unemployment Dynamics," Sciences Po publications info:hdl:2441/1avjr94u1u9, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/1avjr94u1u9dkqrhs6u825vpp4
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    Cited by:

    1. Hartung, Benjamin & Jung, Philip & Kuhn, Moritz, 2018. "What Hides behind the German Labor Market Miracle? Unemployment Insurance Reforms and Labor Market Dynamics," IZA Discussion Papers 12001, Institute of Labor Economics (IZA).
    2. Murtin, Fabrice & de Serres, Alain & Hijzen, Alexander, 2014. "Unemployment and the coverage extension of collective wage agreements," European Economic Review, Elsevier, vol. 71(C), pages 52-66.
    3. Gehrke, Britta & Weber, Enzo, 2018. "Identifying asymmetric effects of labor market reforms," European Economic Review, Elsevier, vol. 110(C), pages 18-40.
    4. Pignatti Clemente & Van Belle Eva, 2021. "Better together: Active and passive labor market policies in developed and developing economies," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-27, January.
    5. Andrews Dan & Ferrari Irene & Saia Alessandro, 2019. "The Costs of Firm Exit and Labour Market Policies: New Evidence from Europe," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(1), pages 1-24, January.
    6. Loreta ISARAJ & Meleq HOXHAJ, 2021. "Macroeconomic factors influencing unemployment in Albania," Romanian Journal of Economics, Institute of National Economy, vol. 53(2(62)), pages 56-67, December.
    7. Alain de Serres & Fabrice Murtin, 2014. "Unemployment at risk: the policy determinants of labour market exposure to economic shocks [Labor market institutions and the business cycle: unemployment rigidities vs wage rigidities]," Economic Policy, CEPR;CES;MSH, vol. 29(80), pages 603-637.
    8. Yann Thommen, 2019. "Réformes structurelles et résilience des marchés du travail en zone euro," Bulletin de l'Observatoire des politiques économiques en Europe, Observatoire des Politiques Économiques en Europe (OPEE), vol. 41(1), pages 21-32, December.
    9. Bradley, Jake & Kügler, Alice, 2019. "Labor market reforms: An evaluation of the Hartz policies in Germany," European Economic Review, Elsevier, vol. 113(C), pages 108-135.
    10. Chiara Mussida & Luca Zanin, 2020. "Determinants of the Choice of Job Search Channels by the Unemployed Using a Multivariate Probit Model," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(1), pages 369-420, November.
    11. Marwa Sahnoun & Chokri Abdennadher, 2018. "The assessment of active labor market policies: evidence from OECD countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 257-283, August.
    12. Yann Thommen, 2019. "Réformes structurelles et résilience des marchés du travail en zone euro," Bulletin de l'Observatoire des politiques économiques en Europe, Observatoire des Politiques Économiques en Europe (OPEE), vol. 41(1), pages 21-32, November.
    13. François Geerolf & Thomas Grjebine, 2014. "Assessing House Price Effects on Unemployment Dynamics," Working Papers 2014-25, CEPII research center.

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    More about this item

    Keywords

    Unemployment dynamics; Turnover; Labor market institutions; Job search; Matching function;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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