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

Author

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  • Elisa Gamberoni
  • Erik Von Uexkull
  • Sebastian Weber

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.
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Suggested Citation

  • Elisa Gamberoni & Erik Von Uexkull & Sebastian Weber, 2010. "The Roles of Openness and Labor Market Institutions for Employment Dynamics during Economic Crises," World Bank Other Operational Studies 10155, The World Bank.
  • Handle: RePEc:wbk:wboper:10155
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    References listed on IDEAS

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    Cited by:

    1. Dominika Bochanczyk-Kupka, 2016. "The institution of intellectual property rights protection in the face of economic crisis," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 15(2), pages 167-177, June.
    2. Junankar, Pramod N. (Raja), 2011. "The Global Economic Crisis: Long-Term Unemployment in the OECD," IZA Discussion Papers 6057, Institute for the Study of Labor (IZA).
    3. Sentance, Andrew & Taylor, Mark P. & Wieladek, Tomasz, 2012. "How the UK economy weathered the financial storm," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 102-123.
    4. World Bank, 2011. "Challenges to Enterprise Performance in the Face of the Financial Crisis : Eastern Europe and Central Asia," World Bank Publications, The World Bank, number 2316.

    More about this item

    Keywords

    Social Protections and Labor - Labor Markets Social Protections and Labor - Labor Policies Social Protections and Labor - Labor Management and Relations Social Protections and Labor - Labor Standards Poverty Reduction - Achieving Shared Growth;

    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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