28 Pages Posted: 25 Mar 2012
Date Written: March 2012
The aim of this paper is to analyze the relationship between labor market flexibility and unemployment outcomes. Using a panel of 97 countries from 1985 to 2008, the results of the paper suggest that improvements in labor market flexibility have a statistically and significant negative impact on unemployment outcomes (over unemployment, youth unemployment and long-term unemployment). Among the different labor market flexibility indicators analyzed, hiring and firing regulations and hiring costs are found to have the strongest effect.
Keywords: Labor Market, Flexibility, Unemployment, Reforms, Financial Crises, Labor Markets, Oecd, Analysis Of Collective Decision-making
JEL Classification: E29, J60, E32
Suggested Citation: Suggested Citation
Bernal-Verdugo, Lorenzo E. and Furceri, Davide and Guillaume, Dominique M., Labor Market Flexibility and Unemployment: New Empirical Evidence of Static and Dynamic Effects (March 2012). IMF Working Paper No. NO.12/64. Available at SSRN: https://ssrn.com/abstract=2028240