The impact of endogenous product and labour market reforms on unemployment : new evidence based on local projections

• Autor(a) principal: Wiese, Rasmus
• Data de Publicação: 2023
• Outros Autores: Haan, Jakob de, Jalles, João Tovar
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.5/29139
• topic: unemployment; structural reforms; local projections; endogeneity of reforms; nonlinearities; collective bargaining; AIPW

We examine the impact of structural reforms on unemployment in 25 OECD countries between 1970- 2020. Our local projection (LP) results suggest that labour market reforms reduce unemployment, but only after four years (for youth unemployment it takes longer for the effect to set in), while product market reforms have no statistically significant effect on unemployment. However, if we control for the endogeneity of reforms, the effect of labour market reform becomes statistically significant within a year, while product market reforms temporarily increase unemployment. We also find that labour market reforms hardly have an impact on unemployment in the euro area and that labour market reforms do not significantly affect unemployment when the economy is below trend. The effects of structural reforms on unemployment are stronger under high collective bargaining.