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Fighting UnemploymentThe Limits of Free Market Orthodoxy$
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David Howell

Print publication date: 2005

Print ISBN-13: 9780195165845

Published to Oxford Scholarship Online: July 2005

DOI: 10.1093/0195165845.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 02 August 2021

 Labor Market Institutions and Unemployment: Assessment of the Cross‐Country Evidence

 Labor Market Institutions and Unemployment: Assessment of the Cross‐Country Evidence

(p.72) 3. Labor Market Institutions and Unemployment: Assessment of the Cross‐Country Evidence
Fighting Unemployment

Dean Baker

Andrew Glyn

David R. Howell

John Schmitt

Oxford University Press

Chapter 3 takes up the question of the robustness of the cross-country evidence for the orthodox claim that labor market institutions explain the pattern of unemployment across the affluent countries. A detailed survey of the most influential cross-country statistical studies finds a wide range of results that are highly sensitive to the nature of the variables, the time period, and the econometric method employed. Simple scatter plots of unemployment against six standard measures of labor market institutions for five-year periods between 1980 and 1999 show no significant relationships. In their multivariate tests, which follow standard approaches, the authors find weak and even perverse effects of the standard institutional variables. They conclude that “the empirical case has not been made that could justify the sweeping and unconditional prescriptions for labor market deregulation which pervade much of the policy discussion.”

Keywords:   welfare state, labor market, regulation, deregulation, unemployment, employment, labor market institutions, unemployment benefits, employment protection

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