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Labor Market Reforms and Unemployment Fluctuations

Author

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  • Bettarelli, Luca
  • Duval, Romain
  • Furceri, Davide
  • Jalles, Joao Tovar

Abstract

This paper examines the role of unemployment benefits (UB) and employment protection legislation (EPL) reforms in shaping the response of unemployment to output changes. Results—based on local projection estimates for an unbalanced sample of 27 advanced economies during the period 1970-2019—suggest that reforms reducing the generosity of UB dampen the response of unemployment to output changes, while reforms reducing the stringency of EPL amplify it. Results are robust to a battery of robustness checks, including control for potential confounder effects and an instrumental variable approach to address endogeneity.

Suggested Citation

  • Bettarelli, Luca & Duval, Romain & Furceri, Davide & Jalles, Joao Tovar, 2024. "Labor Market Reforms and Unemployment Fluctuations," CEPR Discussion Papers 18965, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18965
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    More about this item

    Keywords

    Unemployment rate;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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