University of Dundee Labour market institutions and macroeconomic shocks
نویسندگان
چکیده
Macroeconomic shocks and labour-market institutions jointly determine employment growth and economic performance. The effect of shocks depends on the nature of these institutions and the effect of institutional change depends on the macroeconomic environment. It follows that a given set of institutions may be appropriate in one epoch and not in another. We derive a dynamic model of labour demand in which the effect of firing costs on labour demand depends on the macroeconomic environment: When the level of macroeconomic activity is expected to drop and/or the trend rate of productivity growth is small, a rise in firing costs affects mainly (and adversely) the hiring decision and not the layoff decision. This makes firing costs harmful to employment when it may appear most appropriate. In contrast, firing costs can raise employment during periods of high growth and postive shocks. Our hypothesis is supported by empirical results using OECD data.
منابع مشابه
Labour Market Institutions and Macroeconomic Shocks
Labour Market Institutions and Macroeconomic Shocks* Macroeconomic shocks and labour-market institutions jointly determine employment growth and economic performance. The effect of shocks depends on the nature of these institutions, and the effect of institutional change depends on the macroeconomic environment. It follows that a given set of institutions may be appropriate in one epoch and not...
متن کاملUnemployment, Labour Market Institutions and Shocks∗
This paper aims to explain the cross sectional differences in, and the time series evolution of, OECD unemployment from 1960 to 1995. We want to know how much of it can be accounted for by changes in labour market institutions, and the interactions of institutions and macroeconomic shocks. Our aim is also to verify the consistency of unemployment fluctuations with the labour cost results presen...
متن کاملAssessing macroeconomic shocks, bank stability and the housing market in the Iranian economy with the FAVAR approach
Monetary and credit policies, however, are widely accepted by economists and policymakers as a means of stabilizing the real sector of the economy and achieving sustainable economic growth. However, macroeconomic shocks, in turn, affect the stability of the banking system and real sectors of the economy, including the housing market. Therefore, the study of the impact of macroeconomic shocks o...
متن کاملReaction of Stock Market Index to Oil Price Shocks
T his study examines how oil price shocks interact with the stock market index within a nonlinear autoregressive distributed lag model in Iran. Based on quarterly data for the period from 1991 to 2017, the findings revealed statistically significant evidence of short-run and long-run asymmetric behavior of stock market index in response to the positive a...
متن کاملInstitutions and Wage Determination: a Multi-Country Approach∗
We present an empirical analysis of the determinants of labour cost in OECD countries, with particular reference to the impact of labour market institutions from 1960 to 1994. The main contribution of the paper is to show that labour market regulations can explain a large part of labour cost rise in OECD countries in the last decades once we control for productivity. These results are consisten...
متن کامل