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The macroeconomic impact of euro area labor market reforms: evidence from a narrative panel VAR

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  • Rünstler, Gerhard

Abstract

Using quarterly narrative evidence, the paper examines the macro-economic impact of reforms of unemployment benefits (UB) and employment protection legislation (EPL) in the euro area from a Bayesian narrative panel VAR. The approach complements micro-econometric approaches by assessing aggregate effects and aligning short- and medium-term effects in a unified framework. I find that liberalizing reforms of UB and regular contract EPL resulted in temporary wage declines and persistent increases in economic activity and employment.

Suggested Citation

  • Rünstler, Gerhard, 2024. "The macroeconomic impact of euro area labor market reforms: evidence from a narrative panel VAR," European Economic Review, Elsevier, vol. 168(C).
  • Handle: RePEc:eee:eecrev:v:168:y:2024:i:c:s0014292124001491
    DOI: 10.1016/j.euroecorev.2024.104820
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    More about this item

    Keywords

    Employment protection legislation; Unemployment benefits; Narrative Identification; Discriminant Regression;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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