The Role of Labor Market Institutions in the Great Recession

Journal article

Publication Details

Author(s): Merkl C, Lechthaler W, Boysen-Hogrefe J, Groll D
Journal: Applied Economics Quarterly
Publisher: Dunker & Humblot
Publication year: 2010
Volume: 61
Journal issue: Supplement
Pages range: 65-88
ISSN: 1611-6607
eISSN: 1865-5122
Language: English


The recent Great Recession had very heterogeneous effects on the labor market outcomes in industrialized countries. We analyze the role of three labor market institutions in this context, namely the level of firing costs, the existence of short-time work and the wage formation process. This paper combines two different perspectives, a structural dynamic model perspective and an empirical cross-country perspective. Using the Lechthaler, Merkl, and Snower (2010) model, we first simulate the effects of the three labor market institutions during a recession. Using the panel of the EU-15 countries without Luxembourg, we then test the predictions of the model. Indeed, we find evidence that the three labor market institutions can partially explain the different labor market reactions across countries during the Great Recession. However, further empirical research is needed, as more data can be expected to become available, especially with respect to the use of short-time work in different countries.

FAU Authors / FAU Editors

Merkl, Christian Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Makroökonomik

How to cite

Merkl, C., Lechthaler, W., Boysen-Hogrefe, J., & Groll, D. (2010). The Role of Labor Market Institutions in the Great Recession. Applied Economics Quarterly, 61(Supplement), 65-88.

Merkl, Christian, et al. "The Role of Labor Market Institutions in the Great Recession." Applied Economics Quarterly 61.Supplement (2010): 65-88.


Last updated on 2018-19-04 at 02:44