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Title:Labor market institutions: Curse or blessing? PDF Logo
Authors:Ochsen, Carsten
Welsch, Heinz
Issue Date:2006
Series/Report no.:Thünen-series of applied economic theory 62
Abstract:Previous literature has identified considerable non-pecuniary costs to macroeconomic fluctuation and uncertainty. The present paper investigates whether and to what extent labor market institutions can mitigate those costs. We study how life satisfaction of European citizens is affected by employment protection and the level and duration of unemployment benefit payments. We differentiate between direct effects (at given macroeconomic conditions) and total effects (including the feedback through the institutions' effect on macroeconomic outcomes). We find that the total effect of employment protection is positive, whereas the total effect of benefit duration is negative. The direct and indirect effects of a higher benefit level nearly neutralize each other.
Subjects:unemployment benefit
employment protection
macroeconomic uncertainty
cost-benefit analysis
life satisfaction
happiness
JEL:J30
E24
E60
D71
I31
Document Type:Working Paper
Appears in Collections:Thünen Series of Applied Economic Theory, Universität Rostock

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