IDEAS home Printed from https://ideas.repec.org/p/wfo/wpaper/y2011i396.html
   My bibliography  Save this paper

Why Labour Market Response Differed in the Great Recession: The Impact of Institutions and Policy

Author

Listed:
  • Karl Aiginger
  • Thomas Horvath
  • Helmut Mahringer

    (WIFO)

Abstract

This paper investigates the performance of labour markets during the recent crisis for 28 industrialised countries, specifically the reaction of employment and unemployment indicators relative to output changes. We construct a composite indicator for output as well as labour market performance. The determinants of cross-country differences we chose are regulation, flexicurity elements and contracts. We find a robust positive impact of labour market regulation, while the impacts of flexicurity strategies and contracts are difficult to pin down econometrically. Finally we venture a tentative look at the ongoing recovery.

Suggested Citation

  • Karl Aiginger & Thomas Horvath & Helmut Mahringer, 2011. "Why Labour Market Response Differed in the Great Recession: The Impact of Institutions and Policy," WIFO Working Papers 396, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2011:i:396
    as

    Download full text from publisher

    File URL: https://www.wifo.ac.at/wwa/pubid/43774
    File Function: abstract
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Antonio Spilimbergo & Steve Symansky & Olivier Blanchard & Carlo Cottarelli, 2009. "Fiscal Policy For The Crisis," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 10(02), pages 26-32, July.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," American Economic Review, American Economic Association, vol. 99(2), pages 466-472, May.
    3. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084, Elsevier.
    4. Franz Traxler, 2003. "Bargaining (De)centralization, Macroeconomic Performance and Control over the Employment Relationship," British Journal of Industrial Relations, London School of Economics, vol. 41(1), pages 1-27, March.
    5. Aiginger, Karl, 2010. "The Great Recession vs. the Great Depression: Stylized facts on siblings that were given different foster parents," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-41.
    6. Andrew K. Rose & Mark M. Spiegel, "undated". "Cross-Country Causes and Consequences of the 2008 Crisis: Early Warning," Working Papers 6, Department of the Treasury, Ministry of the Economy and of Finance.
    7. Berkmen, S. Pelin & Gelos, Gaston & Rennhack, Robert & Walsh, James P., 2012. "The global financial crisis: Explaining cross-country differences in the output impact," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 42-59.
    8. Philip R Lane & Gian Maria Milesi-Ferretti, 2011. "The Cross-Country Incidence of the Global Crisis," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 59(1), pages 77-110, April.
    9. Karl Aiginger, 2009. "Strengthening the Resilience of an Economy. Strategies to Prevent another Crisis," WIFO Working Papers 338, WIFO.
    10. AIGINGER Karl, 2011. "Why Performance Differed Across Countries In The Recent Crisis," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 55(2), pages 20-27.
    11. Iana Liadze & Ray Barrell & Professor E. Philip Davis, 2010. "Evaluating off-balance sheet exposures in banking crisis determination models," National Institute of Economic and Social Research (NIESR) Discussion Papers 357, National Institute of Economic and Social Research.
    12. Stijn Claessens, 2010. "The Financial Crisis," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 4(2), pages 177-196, May.
    13. Karl Aiginger, 2011. "Why Growth Performance Differed across Countries in the Recent Crisis: the Impact of Pre-crisis Conditions," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 35-52, August.
    14. Karl Aiginger, 2011. "Why Performance Differed Across Countries in the Recent Crisis. How Country Performance in the Recent Crisis Depended on Pre-crisis Conditions," WIFO Working Papers 387, WIFO.
    15. Jean-Claude Barbier & Fabrice Colomb & Per Kongshøj Madsen, 2009. "Flexicurity - an open method of coordination, at the national level?," Documents de travail du Centre d'Economie de la Sorbonne 09046, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    16. John Martin & Stefano Scarpetta, 2012. "Setting It Right: Employment Protection, Labour Reallocation and Productivity," De Economist, Springer, vol. 160(2), pages 89-116, June.
    17. Aiginger, Karl, 2010. "The Great Recession versus the Great Depression: stylized facts on siblings that were given different foster parents," Economics Discussion Papers 2010-9, Kiel Institute for the World Economy (IfW Kiel).
    18. Karl Aiginger, 2009. "Strengthening the resilience of an economy," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 44(5), pages 309-316, September.
    19. Howell David R. & Baker Dean & Glyn Andrew & Schmitt John, 2007. "Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence," Capitalism and Society, De Gruyter, vol. 2(1), pages 1-73, May.
    20. Karl Aiginger, 2010. "Post Crisis Policy: Some Reflections of a Keynesian Economist," WIFO Working Papers 371, WIFO.
    21. Stijn Claessens & Giovanni Dell’Ariccia & Deniz Igan & Luc Laeven, 2010. "Cross-country experiences and policy implications from the global financial crisis [From Great Depression to Great Credit Crisis: Similarities, differences and lessons]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 25(62), pages 267-293.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thomas Grebel & Mauro Napoletano & Lionel Nesta, 2023. "Distant but Close in Sight: Firm‐level Evidence on French–German Productivity Gaps in Manufacturing," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(1), pages 228-261, March.
    2. Christine Erhel & Charlotte Levionnois, 2013. "Labour Market Policies in Times of Crisis: A Comparison of the 1992-1993 and 2008-2010 Recessions," Documents de travail du Centre d'Economie de la Sorbonne 13060, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    3. Karl Aiginger & Kurt Kratena & Margit Schratzenstaller-Altzinger & Teresa Weiss, 2014. "Moving Towards a New Growth Model. WWWforEurope Deliverable No. 3," WIFO Studies, WIFO, number 47247.
    4. Rainer Eppel & Ulrike Famira-Mühlberger & Julia Bock-Schappelwein, 2014. "Kennzeichen des österreichischen Arbeitsmarktes im EU-Vergleich," WIFO Monatsberichte (monthly reports), WIFO, vol. 87(11), pages 755-766, November.
    5. Thomas Bredgaard & Per Kongshøj Madsen, 2018. "Farewell flexicurity? Danish flexicurity and the crisis," Transfer: European Review of Labour and Research, , vol. 24(4), pages 375-386, November.
    6. Werner Eichhorst & Tito Boeri & Michela Braga & An de Coen & Galasso Vicenzo & Maarten Gerard & Michael J. Kendzia & Christine Mayrhuber & Jakob Louis Pedersen & Ricarda Schmidl & Nadia Steiber, 2013. "Combining the Entry of Young People in the Labour Market with the Retention of Older Workers," WIFO Studies, WIFO, number 46988.
    7. Agata Drobiszová & Zuzana Machová, 2015. "Vliv fiskální politiky na ekonomický růst v zemích OECD [The Impact of Fiscal Policy on Economic Growth in the OECD Countries]," Politická ekonomie, Prague University of Economics and Business, vol. 2015(3), pages 300-316.
    8. Markus Leibrecht & Silvia Rocha-Akis, 2014. "Sozialpartnerschaft und makroökonomische Performance," WIFO Monatsberichte (monthly reports), WIFO, vol. 87(8), pages 555-567, August.
    9. Christine Erhel & Charlotte Levionnois, 2013. "Labour Market Policies in Times of Crisis: A Comparison of the 1992-1993 and 2008-2010 Recessions," Post-Print halshs-00880933, HAL.
    10. Gurvich, E. & Vakulenko, E., 2018. "Studies of Russian Labor Market and Economic Policy," Journal of the New Economic Association, New Economic Association, vol. 37(1), pages 203-212.
    11. Zuzana Machova & Igor Kotlan, 2014. "Expenditures on Collective and Individual Services: Discussion on the Classification of Government Expenditures with Regard to their Inclusion into Growth Models," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 4, pages 287-296, December.
    12. Thomas Grebel & Mauro Napoletano & Lionel Nesta, 2022. "Distant but Close in Sight: Firm‐level Evidence on French–German Productivity Gaps in Manufacturing," Post-Print hal-04531123, HAL.
    13. Ulrike Huemer, 2018. "Arbeitsmarktbeobachtung anhand des Arbeitsmarktmonitors," WIFO Monatsberichte (monthly reports), WIFO, vol. 91(6), pages 413-425, June.
    14. Fritz Breuss, 2013. "Die Größe der Kleinen in der EU," WIFO Working Papers 452, WIFO.
    15. Christine Erhel & Charlotte Levionnois, 2015. "Labour Market Policies in Times of Crisis: A Reaction Function Approach for the Period 1985–2010," LABOUR, CEIS, vol. 29(2), pages 141-162, June.
    16. Christine Erhel & Charlotte Levionnois, 2013. "Labour Market Policies in Times of Crisis: A Comparison of the 1992-1993 and 2008-2010 Recessions," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00880933, HAL.
    17. Ulrike Famira-Mühlberger & Thomas Leoni, 2014. "Die wirtschaftliche und soziale Lage in Österreich," WIFO Studies, WIFO, number 47475.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Karl Aiginger, 2011. "Why Growth Performance Differed across Countries in the Recent Crisis: the Impact of Pre-crisis Conditions," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 35-52, August.
    2. AIGINGER Karl, 2011. "Why Performance Differed Across Countries In The Recent Crisis," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 55(2), pages 20-27.
    3. Karl Aiginger, 2016. "Political Rebound Effects as Stumbling Blocks for Socio-ecological Transition," WIFO Working Papers 519, WIFO.
    4. Karl Aiginger & Alois Guger, 2014. "Stylized Facts on the Interaction between Income Distribution and the Great Recession," Research in Applied Economics, Macrothink Institute, vol. 6(3), pages 157-178, September.
    5. Anna Shostya, 2019. "The Global Financial Crisis in Transition Economies: The Role of Initial Conditions," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(1), pages 37-51, March.
    6. Alexandra Born & Zeno Enders, 2019. "Global Banking, Trade, and the International Transmission of the Great Recession," The Economic Journal, Royal Economic Society, vol. 129(623), pages 2691-2721.
    7. Fritz Breuss, 2012. "EU-Mitgliedschaft Österreichs. Eine Evaluierung in Zeiten der Krise," WIFO Studies, WIFO, number 45578.
    8. Pierre-Olivier Gourinchas & Maurice Obstfeld, 2012. "Stories of the Twentieth Century for the Twenty-First," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(1), pages 226-265, January.
    9. Thorvardur Tjörvi Ólafsson & Thórarinn G. Pétursson, 2010. "Weathering the financial storm: The importance of fundamentals and flexibility," Economics Working Papers 2010-17, Department of Economics and Business Economics, Aarhus University.
    10. Susanne Bärenthaler-Sieber & Sandra Bilek-Steindl & Christian Glocker, 2013. "Trade Synchronisation During Major Economic Crises," WIFO Working Papers 449, WIFO.
    11. Artha Hoxha, 2018. "Explaining the impact of the global financial crisis on European transition countries: a GVAR approach," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q2-18, pages 81-97.
    12. Karl Aiginger, 2010. "Post Crisis Policy: Some Reflections of a Keynesian Economist," WIFO Working Papers 371, WIFO.
    13. Frankel, Jeffrey & Saravelos, George, 2012. "Can leading indicators assess country vulnerability? Evidence from the 2008–09 global financial crisis," Journal of International Economics, Elsevier, vol. 87(2), pages 216-231.
    14. Bruce N. Lehmann & David M. Modest, 1985. "The Empirical Foundations of the Arbitrage Pricing Theory I: The Empirical Tests," NBER Working Papers 1725, National Bureau of Economic Research, Inc.
    15. Rose, Andrew K. & Spiegel, Mark M., 2011. "Cross-country causes and consequences of the crisis: An update," European Economic Review, Elsevier, vol. 55(3), pages 309-324, April.
    16. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2013. "Competitiveness under New Perspectives. WWWforEurope Working Paper No. 44," WIFO Studies, WIFO, number 47019.
    17. Chinazzi, Matteo & Fagiolo, Giorgio & Reyes, Javier A. & Schiavo, Stefano, 2013. "Post-mortem examination of the international financial network," Journal of Economic Dynamics and Control, Elsevier, vol. 37(8), pages 1692-1713.
    18. Yamarik, Steven & El-Shagi, Makram & Yamashiro, Guy, 2016. "Does inequality lead to credit growth? Testing the Rajan hypothesis using state-level data," Economics Letters, Elsevier, vol. 148(C), pages 63-67.
    19. Shehzad, Choudhry Tanveer & De Haan, Jakob, 2013. "Was the 2007 crisis really a global banking crisis?," The North American Journal of Economics and Finance, Elsevier, vol. 24(C), pages 113-124.
    20. Dwyer, Shane & Tan, Chih Ming, 2014. "Hits and runs: Determinants of the cross-country variation in the severity of impact from the 2008–09 financial crisis," Journal of Macroeconomics, Elsevier, vol. 42(C), pages 69-90.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wfo:wpaper:y:2011:i:396. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Florian Mayr (email available below). General contact details of provider: https://edirc.repec.org/data/wifooat.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.