Identifying Asymmetric Effects of Labor Market Reforms

Enzo Weber and Britta Gehrke

VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy from Verein für Socialpolitik / German Economic Association

Abstract: This paper proposes a novel approach to identify structural long-term driving forces of the labor market and their state dependent effects. Based on search and matching theory, our empirical model extracts these driving forces within an unobserved components approach. We relate changes in the labor market structures to reforms that enhance the flexibility of the labor market in expansion and recession. Results for Germany and Spain show that labor market reforms have substantially weaker beneficial effects in the short-run when implemented in recessions. From a policy perspective, these results highlight the costs of introducing reforms in recessions.

Keywords: labor market reforms; search and matching; business cycle asymmetries; Markov switching (search for similar items in EconPapers)
JEL-codes: C32 E02 E32 J08 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Related works:
Journal Article: Identifying asymmetric effects of labor market reforms (2018)
Working Paper: Identifying asymmetric effects of labor market reforms (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc18:181513

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