Unemployment and Finance: How Do Financial and Labour Market Factors Interact?

Donatella Gatti and Anne-Gaël Vaubourg ()
Additional contact information
Anne-Gaël Vaubourg: University of Orléans

No 4075, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using data for 18 OECD countries over the period 1980-2004, we investigate how labour and financial factors interact to determine unemployment. We show that the impact of financial variables depends strongly on the labour market context. Increased market capitalization as well as decreased banking concentration reduce unemployment if the level of labour market regulation, union density and coordination in wage bargaining is low. The above financial variables have no effect otherwise. Increasing intermediated credit worsens unemployment when the labour market is weakly regulated and coordinated, whereas it reduces unemployment otherwise. These results suggest that the respective virtues of bank-based and market-based finance are crucially tied to the strength of labour regulation.

Keywords: unemployment; institutional complementarities and substitutabilities; labour market; financial system (search for similar items in EconPapers)
JEL-codes: E24 J23 P17 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009-03
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (28)

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Related works:
Journal Article: Unemployment and finance: how do financial and labour market factors interact? (2012)
Working Paper: Unemployment and finance: how do financial and labour market factors interact? (2012)
Working Paper: Unemployment and finance: how do financial and labour market factors interact? (2012)
Working Paper: Unemployment and finance: how do financial and labour market factors interact? (2010)
Working Paper: Unemployment and Finance: How do Financial and Labour Market Factors Interact? (2009)
Working Paper: Unemployment and finance: how do financial and labour market factors interact? (2009)
Working Paper: Unemployment and finance: how do financial and labour market factors interact? (2009)
Working Paper: Unemployment and finance: how do financial and labour market factors interact? (2009)
Working Paper: Unemployment and finance: how do financial and labour market factors interact ? (2009)
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