Journal Article

Labor market reforms and unemployment dynamics

Authors

Fabrice Murtin, Jean-Marc Robin

Published Date

11 June 2016

Type

Journal Article

We quantify the contribution of labor market reforms to unemployment dynamics in nine OECD countries (Australia, France, Germany, Japan, Portugal, Spain, Sweden, UK, US). We estimate a dynamic stochastic search-matching model with heterogeneous workers and aggregate productivity shocks. The heterogeneous-worker mechanism proposed by Robin (2011) explains unemployment volatility by productivity shocks well in all countries. Placement and employment services, UI benefit reduction and product market deregulation are found to be the most prominent policy levers for unemployment reduction. Business cycle shocks and LMPs explain about the same share of unemployment volatility (except for Japan, Portugal and the US).


Previous version

Labor market reforms and unemployment dynamics
Fabrice Murtin, Jean-Marc Robin
CWP13/14