Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/204029
Authors: 
Heimberger, Philipp
Year of Publication: 
2019
Series/Report no.: 
wiiw Working Paper 164
Abstract: 
This paper provides econometric evidence on the impact of labour market regulations on ('structural') unemployment rates. Based on a data set for 23 OECD countries over the time period 1985‑2013, the panel regression results suggest that standard institutional labour market indicators – such as employment protection legislation, trade union density, tax wedge, minimum wages – largely underperform in explaining (medium-term) unemployment, while cyclical macroeconomic factors – in particular capital accumulation, but also the long-term real interest rate – are essential determinants. These results underscore that the existing macroeconometric evidence in favour of the view that labour market rigidities are at the heart of increased 'structural' unemployment in advanced economies is modest at best. Some labour market variables do have an impact on unemployment, but it is in general smaller than the impact of relevant macroeconomic variables. To understand the development of unemployment in OECD countries, researchers and policy-makers therefore should consider aggregate demand dynamics and focus on capital accumulation.
Subjects: 
unemployment
labour market institutions
NAIRU
capital accumulation
JEL: 
C54
E24
E62
Document Type: 
Working Paper

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