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Former CREA Working Papers |
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Working Papers # 411 | | Title: | Do labor market rigidities matter for business cycles? Yes they do | | Authors: | by Stefano Gnocchi and Evi Pappa | | Date: | 15-07-2009 | | Keywords: | Labor market institutions, Business cycles, OECD countries, rank sum test, active labor market policies | | JEL Codes: | E32, E6, J01, J08 | | Abstract: | | We study whether labor market institutions affect the volatility and correlations of macroeconomic variables for a sample of 20 OECD countries. Labor market rigidities are characterized with a number of indicators; volatilities and correlations are computed in several ways. Union coverage and replacement ratios in the first year of unemployment are the labor market rigidities that most significantly affect business cycle statistics. Active labor market policies are effective in reducing
unemployment volatility in countries with heavily regulated labor markets. | | Download this paper in a PDF file (501.17 Kb) |  Back to the list |
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