Identifying asymmetric effects of labor market reforms

Arbeitspapier

This paper investigates whether the effects of structural labor market reforms depend on the business cycle. Based on search and matching theory, we propose an unobserved components approach with Markov switching to distinguish the effects of structural reforms that increase the flexibility of the labor market in recession and expansion. Our results for Germany and Spain show that reforms have substantially weaker expansionary effects in the short-run when implemented in recessions. In consequence, reforms are unlikely to mitigate the impact of crisis in the short-run. From a policy perspective, these results highlight the costs of introducing reforms in recessions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IAB-Discussion Paper ; No. 23/2017

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models ; Institutions and the Macroeconomy ; Business Fluctuations; Cycles ; Labor Economics Policies
• Subject: labor market reforms ; search and matching ; business cycle asymmetries ; Markov switching

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gehrke, Britta ; Weber, Enzo
• Event: Veröffentlichung
• (who): Institut für Arbeitsmarkt- und Berufsforschung (IAB)
• (where): Nürnberg
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/172887
• Last update: 10.03.2025, 11:43 AM CET