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Labour market resilience: The role of structural and macroeconomic policies

Author

Listed:
  • Alexander Hijzen

    (OECD)

  • Andreas Kappeler

    (European Investment Bank)

  • Mathilde Pak

    (OECD)

  • Cyrille Schwellnus

    (OECD)

Abstract
This paper provides an overview of labour market resilience in the wake of the Great Recession of 2008-09 and the role played by macroeconomic and structural policies. The OECD unemployment rate has returned to close to its pre-crisis level, but the unemployment cost of the Great Recession has nonetheless been very large and long-lasting in many countries. Moreover, as the recovery in output has been weak relative to the recovery in employment, labour productivity and wage growth remain low. Labour market resilience depends crucially on macroeconomic and labour market policy settings. Macroeconomic policies are highly effective in limiting employment declines during economic downturns and preventing that cyclical increases in unemployment become structural. Spending on active labour market policies needs to respond strongly to cyclical increases in unemployment to promote a quick return to work in the recovery and preserve the mutual-obligations ethos of activation regimes. Overly strict employment protection for regular workers reduces resilience by promoting the use of temporary contracts and slowing job creation in the recovery. Co-ordinated collective bargaining systems can promote resilience by facilitating wage and working-time adjustments.

Suggested Citation

  • Alexander Hijzen & Andreas Kappeler & Mathilde Pak & Cyrille Schwellnus, 2017. "Labour market resilience: The role of structural and macroeconomic policies," OECD Economics Department Working Papers 1406, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1406-en
    DOI: 10.1787/d5c950fc-en
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    Citations

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    Cited by:

    1. Amaia Altuzarra & Catalina Gálvez-Gálvez & Ana González-Flores, 2019. "Economic Development and Female Labour Force Participation: The Case of European Union Countries," Sustainability, MDPI, vol. 11(7), pages 1-18, April.
    2. Tomomi Miyazaki & Haruo Kondoh, 2022. "Effects of Monetary and Fiscal Policy Interactions on Regional Employment: Evidence from Japan," Discussion Papers 2206, Graduate School of Economics, Kobe University.
    3. Jurgita Bruneckiene & Irena Pekarskiene & Oksana Palekiene & Zaneta Simanaviciene, 2019. "An Assessment of Socio-Economic Systems’ Resilience to Economic Shocks: The Case of Lithuanian Regions," Sustainability, MDPI, vol. 11(3), pages 1-24, January.
    4. Brand, Claus & Obstbaum, Meri & Coenen, Günter & Sondermann, David & Lydon, Reamonn & Ajevskis, Viktors & Hammermann, Felix & Angino, Siria & Hernborg, Nils & Basso, Henrique & Hertweck, Matthias & Bi, 2021. "Employment and the conduct of monetary policy in the euro area," Occasional Paper Series 275, European Central Bank.
    5. Ana-Maria Zamfir & Anamaria Beatrice Aldea, 2020. "Digital skills and Labour Market Resilience," Postmodern Openings, Editura Lumen, Department of Economics, vol. 11(1Sup2), pages 188-195, May.
    6. Chiara Castelli & Angela Parenti, 2020. "Commuting in Europe: An Inter-regional Analysis on its Determinants and Spatial Effects," Working Papers 2020.19, Fondazione Eni Enrico Mattei.
    7. Castelli, Chiara & Parenti, Angela, 2020. "Commuting in Europe: An Inter-regional Analysis on its Determinants and Spatial Effects," 2030 Agenda 307985, Fondazione Eni Enrico Mattei (FEEM).

    More about this item

    Keywords

    fiscal policy; labour market policy; politiques budgétaires; politiques du marché de travail; resilience; résilience;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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