Social and Behavioral Sciences Commons^™

How Does Labour Market Structure Affect The Response Of Economies To Shocks?, Istvan Konya, Aurelijus Dabusinskas, Stephen Millard

Istvan Konya

The recent crisis in the Eurozone has led to much discussion about the structure of labour markets in different Eurozone economies. In particular, there has been much talk of the need for structural labour market reform in the Eurozone periphery. But, there are many aspects of labour market structure – eg, wage flexibility, flexibility in hiring and firing, benefits, etc – and it is not clear a priori which aspects really matter. In this paper, we analyse how cross-country differences in labour market characteristics – in particular, wage and employment rigidities – shape the response of different countries to a …