Banking crises, labor reforms, and unemployment

Lorenzo Bernal-Verdugo, Davide Furceri and Dominique Guillaume

Journal of Comparative Economics, 2013, vol. 41, issue 4, 1202-1219

Abstract: Using a sample of 97 countries spanning the period 1980–2008, we estimate that banking crises have, on average, a large negative impact on unemployment. This effect, however, largely depends on the flexibility of labor market institutions: while in countries with more flexible labor markets the impact of banking crises is sharper but short-lived, in countries with more rigid labor markets the effect is initially more subdued but highly persistent. These effects are even larger for youth unemployment in the short term, and long-term unemployment in the medium term. Conversely, large upfront, or gradual but significant, comprehensive market reforms have a positive impact on unemployment, albeit only in the medium term.

Keywords: Labor market; Unemployment; Reforms; Banking crises (search for similar items in EconPapers)
JEL-codes: D7 E29 E32 J60 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (44)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:41:y:2013:i:4:p:1202-1219

DOI: 10.1016/j.jce.2013.03.001

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