Who Bears the Brunt? The Impact of Banking Crises on Younger and Older Workers

CentER Discussion Paper Series No. 2019-025

33 Pages Posted: 17 Jul 2019

See all articles by Mathijs A. Van Dijk

Mathijs A. Van Dijk

Erasmus University Rotterdam (EUR)

Hendrik P. van Dalen

Tilburg University, CentER; Netherlands Interdisciplinary Demographic Institute (NIDI)

Martin Hyde

Swansea University

Date Written: July 17, 2019


How do young and old workers fare on the labor market when a banking crisis occurs? Using data on 41 banking crises in 38 developed countries over 1990-2014, we examine how banking crises affect the labor market position of workers from five different age groups (including 65 years and older) and whether employment protection legislation shields workers from unemployment. Results show that unemployment increases across the board in the aftermath of banking crises, but much more so for younger workers. The labor force participation of older women increases significantly in the medium run, whereas older men withdraw from the labor market. Countries with strong employment protection legislation shield workers from the impact of banking crises in the short run, but show signs of increases in unemployment rates for young and middle-aged workers in the medium run.

Keywords: banking crisis, unemployment, employment protection, age, older workers, labor force

JEL Classification: G0, J01, J08, J14

Suggested Citation

Van Dijk, Mathijs A. and van Dalen, Hendrik P. and Hyde, Martin, Who Bears the Brunt? The Impact of Banking Crises on Younger and Older Workers (July 17, 2019). CentER Discussion Paper Series No. 2019-025, Available at SSRN: https://ssrn.com/abstract=3421407 or http://dx.doi.org/10.2139/ssrn.3421407

Mathijs A. Van Dijk (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA

Hendrik P. Van Dalen

Tilburg University, CentER ( email )

Tilburg University
P.O. Box 90153
Tilburg, NL-5000 LE
+13 4668982 (Phone)

HOME PAGE: http://www.tilburguniversity.nl/webwijs/show/?uid=h.p.vandalen

Netherlands Interdisciplinary Demographic Institute (NIDI) ( email )

P.O. Box 11650
NL-2502 AR The Hague
+70 356 5237 (Phone)
+70 364 7187 (Fax)

HOME PAGE: http://www.nidi.knaw.nl/en/staff/vandalen/

Martin Hyde

Swansea University ( email )

Singleton Park
Swansea, Wales SA2 8PP
United Kingdom

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