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Unemployment and Labor Market Institutions: An Empirical Analysis

Belot, Michele, and van Ours, Jan C.—Unemployment and Labor Market Institutions: An Empirical Analysis
https://doi.org/10.1006/jjie.2001.0486Get rights and content

Abstract

The development of the unemployment rate differs substantially between OECD countries. In this paper we investigate to what extent these differences are related to labor market institutions. In our analysis we use data of eighteen OECD countries over the period 1960–1994 and show that the way in which institutions interact is important. J. Japan. Int. Econ., December 2001, 15(4), pp. 403–418. Department of Economics, CentER, Tilburg University and Institute for Labour Studies (OSA), The Netherlands. © 2001 Elsevier Science (USA).

Journal of Economic Literature Classification Numbers: E24, J68.

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      Thus in the end the final result may well be less, rather than more, labour market flexibility as a whole. Belot and van Ours (2001) deal with the issue of labour market institution complementarity, pointing out that the institutional framework of a country is not a set of independent elements (see also Freeman, 1988). Specifically, they first build a theoretical model in which institutional complementarities are derived, thereafter presenting an empirical investigation using data from 18 OECD countries covering the period from the beginning of the 1960s to the mid ‘90s.

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    The authors thank Shin'ichi Fukuda, Yuji Genda, and other participants of the December 2000 NBER-CEPR-TCER conference in Tokyo for stimulating comments. They also thank David Blanchflower and Andrew Oswald for making their data on home ownership rates available.

    f1

    [email protected], [email protected]

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    Correspondence and reprint requests should be addressed to Department of Economics, Tilburg University, P.O. Box 90153, NL-5000 LE Tilburg, The Netherlands. Fax: +31-13-4663066.

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