Labor market institutions and the business cycle Unemployment rigidities vs. real wage rigidities

Arbeitspapier

This paper investigates the importance of labor market institutions for inflation and unemployment dynamics. Using the New Keynesian framework we argue that labor market institutions should be divided into those institutions that cause Unemployment Rigidities (UR) and those that cause Real Wage Rigidities (RWR). The two types of institutions have opposite effects and their interaction is crucial for the dynamics of inflation and unemployment. We estimate a panel VAR with deterministically varying coefficients and find that there is a profound difference in the responses of unemployment and inflation to shocks under different constellations of the labor market.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 1183

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Monetary Policy
• Subject: business cycle ; Labor Market Search ; monetary policy ; Real Wage Rigidity ; Unemployment ; Reallohn ; Lohnrigidität ; Arbeitsuche ; Neoklassische Synthese ; Konjunktur ; Geldpolitik ; VAR-Modell

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Abbritti, Mirko ; Weber, Sebastian
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/153617
• Last update: 10.03.2025, 11:42 AM CET