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Why Labour Market Response Differed in the Great Recession: The Impact of Institutions and Policy

Author

Listed:
  • Karl Aiginger

    (WIFO)

  • Thomas Horvath

    (WIFO)

  • Helmut Mahringer

    (WIFO)

Abstract

This paper investigates the performance of labour markets during the recent crisis for 28 industrialised countries, specifically the reaction of employment and unemployment indicators relative to output changes. We construct a composite indicator for output as well as labour market performance. The determinants of cross-country differences we chose are regulation, flexicurity elements and contracts. We find a robust positive impact of labour market regulation, while the impacts of flexicurity strategies and contracts are difficult to pin down econometrically. Finally we venture a tentative look at the ongoing recovery.

Suggested Citation

  • Karl Aiginger & Thomas Horvath & Helmut Mahringer, 2011. "Why Labour Market Response Differed in the Great Recession: The Impact of Institutions and Policy," WIFO Working Papers 396, WIFO.
  • Handle: RePEc:wfo:wpaper:y:2011:i:396
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," American Economic Review, American Economic Association, vol. 99(2), pages 466-472, May.
    2. Berkmen, S. Pelin & Gelos, Gaston & Rennhack, Robert & Walsh, James P., 2012. "The global financial crisis: Explaining cross-country differences in the output impact," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 42-59.
    3. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084 Elsevier.
    4. Andrew K. Rose & Mark M. Spiegel, "undated". "Cross-Country Causes and Consequences of the 2008 Crisis: Early Warning," Working Papers 6, Department of the Treasury, Ministry of the Economy and of Finance.
    5. Philip R Lane & Gian Maria Milesi-Ferretti, 2011. "The Cross-Country Incidence of the Global Crisis," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 59(1), pages 77-110, April.
    6. John Martin & Stefano Scarpetta, 2012. "Setting It Right: Employment Protection, Labour Reallocation and Productivity," De Economist, Springer, vol. 160(2), pages 89-116, June.
    7. Aiginger, Karl, 2010. "The Great Recession versus the Great Depression: stylized facts on siblings that were given different foster parents," Economics Discussion Papers 2010-9, Kiel Institute for the World Economy (IfW).
    8. Antonio Spilimbergo & Steve Symansky & Olivier Blanchard & Carlo Cottarelli, 2009. "Fiscal Policy For The Crisis," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 10(2), pages 26-32, July.
    9. Karl Aiginger, 2009. "Strengthening the resilience of an economy," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 44(5), pages 309-316, September.
    10. Karl Aiginger, 2010. "Post Crisis Policy: Some Reflections of a Keynesian Economist," WIFO Working Papers 371, WIFO.
    11. Franz Traxler, 2003. "Bargaining (De)centralization, Macroeconomic Performance and Control over the Employment Relationship," British Journal of Industrial Relations, London School of Economics, vol. 41(1), pages 1-27, March.
    12. AIGINGER Karl, 2011. "Why Performance Differed Across Countries In The Recent Crisis," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 55(2), pages 20-27.
    13. Karl Aiginger, 2011. "Why Performance Differed Across Countries in the Recent Crisis. How Country Performance in the Recent Crisis Depended on Pre-crisis Conditions," WIFO Working Papers 387, WIFO.
    14. Jean-Claude Barbier & Fabrice Colomb & Per Kongshøj Madsen, 2009. "Flexicurity - an open method of coordination, at the national level?," Documents de travail du Centre d'Economie de la Sorbonne 09046, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    15. Stijn Claessens & Giovanni Dell'Ariccia & Deniz Igan & Luc Laeven, 2010. "Cross-country experiences and policy implications from the global financial crisis," Economic Policy, CEPR;CES;MSH, vol. 25, pages 267-293, April.
    16. Howell David R. & Baker Dean & Glyn Andrew & Schmitt John, 2007. "Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence," Capitalism and Society, De Gruyter, vol. 2(1), pages 1-73, May.
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    1. repec:wfo:wstudy:56809 is not listed on IDEAS
    2. repec:wfo:monber:y:2018:i:6:p:413-425 is not listed on IDEAS
    3. Markus Leibrecht & Silvia Rocha-Akis, 2014. "Social Partnership and Macroeconomic Performance," WIFO Studies, WIFO, number 47406.
    4. Christine Erhel & Charlotte Levionnois, 2013. "Labour Market Policies in Times of Crisis: A Comparison of the 1992-1993 and 2008-2010 Recessions," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00880933, HAL.
    5. Christine Erhel & Charlotte Levionnois, 2015. "Labour Market Policies in Times of Crisis: A Reaction Function Approach for the Period 1985–2010," LABOUR, CEIS, vol. 29(2), pages 141-162, June.
    6. Rainer Eppel & Ulrike Famira-Mühlberger & Julia Bock-Schappelwein, 2014. "Indicators of the Austrian Labour Market: an EU-wide Comparison," WIFO Monatsberichte (monthly reports), WIFO, vol. 87(11), pages 755-766, November.
    7. Agáta Drobiszová & Zuzana Machová, 2015. "Vliv fiskální politiky na ekonomický růst v zemích OECD
      [The Impact of Fiscal Policy on Economic Growth in the OECD Countries]
      ," Politická ekonomie, University of Economics, Prague, vol. 2015(3), pages 300-316.
    8. repec:nea:journl:y:2018:i:37:p:203-212 is not listed on IDEAS
    9. repec:wfo:wstudy:47475 is not listed on IDEAS
    10. Zuzana Machova & Igor Kotlan, 2014. "Expenditures on Collective and Individual Services: Discussion on the Classification of Government Expenditures with Regard to their Inclusion into Growth Models," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 4, pages 287-296, December.

    More about this item

    Keywords

    financial crisis; great recession; labour market performance; labour market regulation; short-time work agreements; flexicurity; Okun's law;

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