GEP 2020/24: Employment to output elasticities and reforms towards flexicurity: Evidence from OECD Countries

Abstract

Labour market reforms in the direction of 'flexicurity' have been widely endorsed as a means to increasing an economy's ability to adjust to negative shocks while offering adequate social safety nets. This paper empirically examines how such reforms infl uence employment's responsiveness to output fluctuations (employment-output elasticity). To address this question, we employ a panel of OECD countries, which also incorporates the period of the Great Recession, and distinguish between passive and active labour market policy types. We find that the effects of any single policy change are shaped by the broader existing policy-mix within which it takes place.

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Authors

Holger Gorg, Cecilia Hornok, Catia Montagna and George E. Onwordi

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