Identifying asymmetric effects of labor market reforms

European Economic Review, 2018, vol. 110, issue C, 18-40

Abstract: This paper proposes a novel approach to identify structural long-term driving forces of the labor market and their short-run state-dependent effects. Based on search and matching theory, our empirical model extracts these driving forces within an unobserved components approach. We relate changes in the labor market structures to reforms that enhance the flexibility of the labor market in expansion and recession. Results for Germany and Spain show that labor market reforms have substantially weaker beneficial effects in the short run when implemented in recessions. From a policy perspective, these results highlight the costs of introducing reforms in recessions.

Keywords: Labor market reforms; Search and matching; Business cycle asymmetries; Markov switching (search for similar items in EconPapers)
JEL-codes: C32 E02 E32 J08 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292118301120
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Identifying Asymmetric Effects of Labor Market Reforms (2018)
Working Paper: Identifying asymmetric effects of labor market reforms (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:110:y:2018:i:c:p:18-40

DOI: 10.1016/j.euroecorev.2018.07.006

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().