Crises, Labor Market Policy, and Unemployment
March 1, 2012
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Summary
Using a sample of 97 countries spanning the period 1980?2008, we estimate that financial crises have a large negative impact on unemployment in the short term, but that this effect rapidly disappears in the medium term in countries with flexible labor market institutions, whereas the impact of financial crises is less pronounced but more persistent in countries with more rigid labor market institutions. These effects are even larger for youth unemployment in the short term and long-term unemployment in the medium term. Conversely, large upfront, or gradual but significant, comprehensive labor market policies have a positive impact on unemployment, albeit only in the medium term.
Subject: Labor, Labor market flexibility, Labor market institutions, Labor market policy, Labor markets, Unemployment
Keywords: Central and Eastern Europe, East Africa, financial crises, flexibility, flexibility indicator, Labor market, Labor market flexibility, labor market indicator, Labor market institutions, Labor market policy, labor market resilience, Labor markets, medium term, Middle East, North Africa, reforms, resilience to financial crises, Sub-Saharan Africa, unemployment, Unemployment, unemployment outcome, WP, youth unemployment
Pages:
29
Volume:
2012
DOI:
Issue:
065
Series:
Working Paper No. 2012/065
Stock No:
WPIEA2012065
ISBN:
9781463938420
ISSN:
1018-5941
