Labor market institutions: Curse or blessing?

Arbeitspapier

Previous literature has identified considerable non-pecuniary costs to macroeconomic fluctuation and uncertainty. The present paper investigates whether and to what extent labor market institutions can mitigate those costs. We study how life satisfaction of European citizens is affected by employment protection and the level and duration of unemployment benefit payments. We differentiate between direct effects (at given macroeconomic conditions) and total effects (including the feedback through the institutions' effect on macroeconomic outcomes). We find that the total effect of employment protection is positive, whereas the total effect of benefit duration is negative. The direct and indirect effects of a higher benefit level nearly neutralize each other.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Thünen-Series of Applied Economic Theory - Working Paper ; No. 62

Classification and Topics

• Classification: Wirtschaft ; Wages, Compensation, and Labor Costs: General ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General ; Social Choice; Clubs; Committees; Associations ; General Welfare; Well-Being
• Subject: unemployment benefit ; employment protection ; macroeconomic uncertainty ; cost-benefit analysis ; life satisfaction ; happiness

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ochsen, Carsten ; Welsch, Heinz
• Event: Veröffentlichung
• (who): Universität Rostock, Institut für Volkswirtschaftslehre
• (where): Rostock
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/39729
• Last update: 10.03.2025, 11:44 AM CET