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Labor Market Institutions and Unemployment: A Critical Assessment of the Cross-Country Evidence, CES Working Paper, no. 98, 2003

Baker, Dean, and Glyn, Andrew, and Howell, David, and Schmitt, John. (2003) Labor Market Institutions and Unemployment: A Critical Assessment of the Cross-Country Evidence, CES Working Paper, no. 98, 2003. [Working Paper]

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    Abstract

    In the last twenty five years, there has been a sharp divergence in trends in the unemployment rate among OECD countries, with some seeing much larger increases in unemployment than others. This divergence is usually explained by institutions that lead to labor market inflexibility – generous unemployment benefits, employment protections, and strong unions – in countries with high unemployment rates. This paper examines the evidence for this view. It shows that there is no simple bivariate relationship between standard measures of labor market institutions and unemployment rates across countries. It then critically examines several of the most often cited studies that support the labor market inflexibility view. It finds that these studies present relatively weak and to some extent contradictory support for the labor market inflexibility view. Finally, the paper presents the results of a set of tests designed to replicate some of the earlier multivariate analyses with more current data. These tests consistently fail to find robust evidence to support the labor market inflexibility view.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > employment/labour market > employment/unemployment
    EU policies and themes > Policies & related activities > employment/labour market > labour/labor
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Harvard University, Center for European Studies > CES Working Papers Series
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 18 Aug 2009
    Page Range: p. 49
    Last Modified: 15 Feb 2011 17:59
    URI: http://aei.pitt.edu/id/eprint/9133

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