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| Title: | | A Bayesian approach to determine the impact of institutions on the unemployment rate  |
| Authors: | | Sachs, Andreas |
| Issue Date: | | 2010 |
| Series/Report no.: | | ZEW Discussion Papers 10-058 |
| Abstract: | | Labor and product market regulations affect the unemployment rate of a country without doubt. Econometricians, however, have yet to establish an unequivocal significance of this impact. Model mis-specification, one of the main underlying problems, is overcome by adopting a Bayesian Model Averaging approach. I apply this method to a panel data set that covers 17 OECD countries for the time period from 1982 to 2005 and for up to 20 potential explanatory variables. 8 institutional indicators are identified as significant determinants of unemployment. Endogeneity due to reverse causality is also considered by applying an instrumental variable estimation approach. |
| Subjects: | | unemployment institutions labor and product markets model averaging |
| JEL: | | C33 E02 E24 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des ZEW ZEW Discussion Papers
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