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Labour Market Institutions and Unemployment: Does Finance Matter?

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  • Christophe Rault

    (Laboratoire d’Economie d’Orléans (LEO), Université d’Orléans, Faculté de Droit, d’Economie et de Gestion, Rue de Blois, BP 26739, 45067 Orléans Cedex 02, France, http://chrault3.free.fr/
    Toulouse Business School, France)

  • Anne-Gaël Vaubourg

    (LEO-Université d’Orléans, Faculté de Droit, d’Economie et de Gestion, Rue de Blois, BP 26739, 45067 Orléans Cedex 02, France.)

Abstract

We explore whether finance influences the impact of labour market institutions on unemployment. Using a data set of 18 OECD countries over 1980–2004, we estimate a panel Vector AutoRegressive model. We check whether causalities from labour market variables to unemployment are affected by financial factors. In Belgium, Italy, Australia, Japan and Spain, accounting for financial indicators mitigates the benefits of labour market flexibility or makes it harmful to employment. In Austria, Canada, Finland and Portugal, it reduces its detrimental impact or makes it beneficial. In Ireland and Netherlands, both effects prevail, depending on the labour market indicator used.

Suggested Citation

  • Christophe Rault & Anne-Gaël Vaubourg, 2012. "Labour Market Institutions and Unemployment: Does Finance Matter?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(1), pages 43-64, March.
    • Handle: RePEc:pal:compes:v:54:y:2012:i:1:p:43-64
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    Cited by:

    1. Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Sultan, Zafar Ahmad & Ahmad, Nawaz, 2017. "Financial Market Development and Employment Nexus in Saudi Arabia," MPRA Paper 109450, University Library of Munich, Germany.

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