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Labour Market Institutions and Unemployment: does Finance Matter?

Author

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  • Christophe Rault

    (LEO - Laboratoire d'économie d'Orleans [2008-2011] - UO - Université d'Orléans - CNRS - Centre National de la Recherche Scientifique, CESifo - Center for Economic Studies and Ifo for Economic Research - CESifo Group Munich)

  • Anne-Gaël Vaubourg

    (LEO - Laboratoire d'économie d'Orleans [2008-2011] - UO - Université d'Orléans - CNRS - Centre National de la Recherche Scientifique)

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 (labour market regulation, union density, coordination in wage bargaining) to unemployment are a ffected by the introduction of financial factors (stock market capitalisation, intermediated credit and banking concentration) in the estimation. In Australia, Belgium, Italy, Japan and Spain, accounting for financial indicators mitigates the bene fits of labour market flexibilization or makes it harmful to employment. In Austria, Canada, Finland and Portugal, it reduces its detrimental impact or makes it bene ficial. In Ireland and Netherlands, both e ffects prevail, depending on the labour market indicator used.

Suggested Citation

  • Christophe Rault & Anne-Gaël Vaubourg, 2013. "Labour Market Institutions and Unemployment: does Finance Matter?," Working Papers halshs-00833452, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00833452
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00833452
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    More about this item

    Keywords

    Chômage; marché du travail; variables financières; interactions institutionnelles; VAR en panel.; Unemployment; labour market; financial factors; institutional interactions; panel VAR.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • P17 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Performance and Prospects

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