Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/35688
Authors: 
Gatti, Donatella
Vaubourg, Anne-Gaël
Year of Publication: 
2009
Series/Report no.: 
IZA discussion papers 4075
Abstract: 
Using data for 18 OECD countries over the period 1980-2004, we investigate how labour and financial factors interact to determine unemployment. We show that the impact of financial variables depends strongly on the labour market context. Increased market capitalization as well as decreased banking concentration reduce unemployment if the level of labour market regulation, union density and coordination in wage bargaining is low. The above financial variables have no effect otherwise. Increasing intermediated credit worsens unemployment when the labour market is weakly regulated and coordinated, whereas it reduces unemployment otherwise. These results suggest that the respective virtues of bank-based and market-based finance are crucially tied to the strength of labour regulation.
Subjects: 
Unemployment
institutional complementarities and substitutabilities
labour market
financial system
JEL: 
E24
J23
P17
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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