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Labor Market Performance in OECD Countries: The Role of Institutional Interdependencies

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  • Andreas Sachs
  • Frauke Schleer
Abstract
Reducing rigidity in labor markets is key to lowering unemployment. Theoretical models suggest that the impact of such reforms depends on the country-specific regulatory framework. We test this hypothesis by estimating the impact of changes in six categories of regulation conditional on the country-specific regulatory environment for 26 OECD countries. We overcome problems of modeling a large set of institutional interdependencies by applying a machine learning type model selection approach. We provide evidence for the existence of higher-order institutional interdependencies. We further document that especially for changes in employment protection and the unemployment benefit system the impact on unemployment is mixed across countries.

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  • Andreas Sachs & Frauke Schleer, 2019. "Labor Market Performance in OECD Countries: The Role of Institutional Interdependencies," International Economic Journal, Taylor & Francis Journals, vol. 33(3), pages 431-454, July.
    • Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:431-454
    DOI: 10.1080/10168737.2019.1612934
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    1. Süheyla Erikli & Serap Pelin Türkoğlu, 2021. "OECD Ülkelerinin İşgücü Piyasası Performans Analizi," Journal of Social Policy Conferences, Istanbul University, Faculty of Economics, vol. 0(80), pages 299-320, June.

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    More about this item

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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