The macroeconomic impact of euro area labour market reforms: evidence from a narrative panel VAR

Gerhard Rünstler ()

No 2592, Working Paper Series from European Central Bank

Abstract: Using new quarterly narrative evidence, this paper examines the macroeconomic impact of reforms of unemployment benefits (UB) and employment protection legislation (EPL) in the euro area from a Bayesian narrative panel VAR. The approach complements existing micro-econometric evidence by aligning short- and mediumterm effects in a unified framework and assessing state dependencies. Liberalising reforms result in temporary wage declines and highly persistent increases in economic activity and employment. In contrast to UB reforms, the effects of EPL reforms on employment emerge only gradually. JEL Classification: E32, J08, O43

Keywords: discriminant regression; employment protection legislation; narrative identification; unemployment benefits (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-cwa, nep-eec, nep-lab and nep-mac
Note: 339116
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20212592

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