Labor Market Rigidities,Trade Openess nd Unemployment-Empirical Evidences from OECD Countries.pdf

1、There is no or limited agreement on the interrelations among labor market rigidities, trade openness and unemployment which leads us to question the resulting outcomes.This study investigates the mystry of European unemp

2、loyment rates and seeks to explore interaction effects through which labor market rigidities may lead to variegated impacts on unemployment rates.Using panel dataset for 34 OECD countries over the period 1985-2012, this

3、study shows that the employment protection legislations (EPL) concerning temporary job contracts (EPT) and permanent job contracts (EPRC) are significantly and negatively related with unemployment, while employment prote

4、ction legislations concerning specific requirements for collective dismissals (EPC) appear positive and signifieant in baseline regression results.Overall, labor market rigidities that seem significantly conducive to hig

5、her unemployment rates are generosity of unemployment benefits, bargaining power of the trade unions and statutory minimum wages.Additionally, this study finds that higher degree of trade openness leads to lower unemploy

6、ment rates.The effect of trade openness appears stronger in case of male youth workers compared to female youth workers.Overall, a one percent increase in trade openness is associated to a decrease in aggregate unemploym

7、ent rate by about 0.97 percentage point which accords very well with the findings by previous studies.To explore the interaction-effects, this study shows that the impact of labor market rigidities does seem to be magnif

8、ied via trade openness.However, only the interaction between employment protection and trade openness shows strong link with unemployment while other interactions appear weak.The positive sign of the interaction term (Tr

9、ade*EPT) implies that the higher the trade openness, the greater (or more positive)the effect of employment protection legislation on unemployment would be; which confirms the propositions by previous studies that trade

10、magnifies the effect of labor market rigidities.Finally, since active labor market policies appear negative and significant only in the case of female youth unemployment rates, it implies that female youth workers can be