The Roles of Openness and Labor Market Institutions for Employment Dynamics during Economic Crises
Employment effects of the recent global economic crisis have differed significantly across countries. An active public debate currently focuses on external shocks and the role of labor market policies as a driver of those differences. In this note,...
| Main Authors: | , , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2010/09/12721305/roles-openness-labor-market-institutions-employment-dynamics-during-economic-crises http://hdl.handle.net/10986/10155 |
| Summary: | Employment effects of the recent global
economic crisis have differed significantly across
countries. An active public debate currently focuses on
external shocks and the role of labor market policies as a
driver of those differences. In this note, the authors
analyze the roles of integration into the global economy and
different labor market institutions during different phases
of past global economic downturns and domestic banking and
debt crises. The authors find that domestic debt and banking
crises were much more severe in their impact on employment
than were global economic downturns: on average, the
reduction in employment growth was more than twice as
strong. The authors also find that openness to trade has
both deepened the contractionary effects on employment and
allowed for a faster recovery. High severance pay dampened
the employment effect in both domestic crises and global
economic downturns, whereas very high unemployment benefits
were associated with stronger reductions in employment growth. |
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