Labour Market Institutions and Amplification of Employment Fluctuations

Abstracts

EN

Labour market reforms have been undertaken to eliminate labour market rigidities in European countries since 1970s. The important features of the reforms are the reduction in adjustment costs and the introduction of fixed-term contracts (FTC). Some empirical studies point out that employment fluctuations have become more volatile after the reforms. This paper presents a model with FTC and analyzes the effects of the key features of the reforms. Numerical examples show that an expected productivity shock causes the oscillatory behaviour of employment. Moreover, a reduction in adjustment costs amplifies fluctuations. In the labour market literature, a number of studies point out the importance of trade unions in European countries. This paper also analyzes the effects of union influence, and the numerical examples indicate that the stronger union influence leads to larger employment fluctuations.

Keywords

EN

employment fluctuations; fixed-term contracts; trade unions; labour market reforms

• Publisher: Uniwersytet Warszawski. Wydział Nauk Ekonomicznych
• Journal: Central European Economic Journal
• Year: 2019
• Volume: 6
• Issue: 53

Dates

published

2020-04-29

Contributors

other

Toyoki Matsue

• International University of Kagoshima
• Research Fellow, Graduate School of Economics, Kobe University

Identifiers

DOI

10.2478/ceej-2019-0010