The Impact of Labour Market Institutions and Capital Accumulation on Unemployment: Evidence for the OECD, 1985-2013
Philipp Heimberger ()
No 164, wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw
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.
Keywords: unemployment; labour market institutions; NAIRU; capital accumulation (search for similar items in EconPapers)
JEL-codes: C54 E24 E62 (search for similar items in EconPapers)
Pages: 34 pages including 6 Tables and 1 Figure
New Economics Papers: this item is included in nep-mac
References: View complete reference list from CitEc
Citations: Track citations by RSS feed
Published as wiiw Working Paper
Downloads: (external link)
https://wiiw.ac.at/the-impact-of-labour-market-ins ... 85-2013-dlp-4886.pdf (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wii:wpaper:164
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw Contact information at EDIRC.
Bibliographic data for series maintained by Customer service ().