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Using data on 48 countries, this paper finds that people in economically freer countries care more about education. This is probably mainly because economic freedom enables them and their children to achieve higher returns to education. The magnitude of the estimated effect is substantial. The paper combines individual-level data from the World Values Survey with country-level data on economic freedom and other relevant factors. It controls for all relevant characteristics of survey respondents as well as for potentially confounding country-level characteristics. It also addresses potential endogeneity of economic freedom.

Using data from 1972 to 2011 on 109 countries, this paper empirically studies the impact of economic freedom on human capital investment. Enrollment in secondary education is used as a proxy for such investments. Controlling for a large number of other determinants of education, it finds that, over the sample period, economic freedom had a substantial positive effect. This is probably because more economic freedom increases the return on investing in human capital, enables people to keep a larger share of the return, and, by facilitating the operation of credit markets, makes it easier for them to undertake such investments in the first place.

Using the results of surveys of senior company managers to measure the strictness of hiring and firing regulation, this article finds that stricter regulation moderately increased unemployment in developing countries over 1992 to 2008.

Using data on 78 countries from 1984 to 2008 and a large number of controls, this article studies the unemployment effect of a major characteristic of the financial system: its level of sophistication, i.e. the variety of financial institutions and instruments available to the economy. It finds that a higher level of sophistication is likely to reduce unemployment. The magnitude of the estimated effect is moderate but noticeable.

Using annual data on 21 industrial countries from the period 1985 to 2009 and a large number of controls, this paper empirically analyzes the impact of technological change on unemployment. As proxy for technological change, it uses the ratio of triadic patent families to population. According to the regression results, an increase in technological change substantially increases unemployment over 3 years. There is no long-term effect, though. The results are robust to both endogeneity and numerous variations in specifications. They support theoretical contributions according to which faster technological progress may increase unemployment, at least during a transition period.

Using data on 21 industrial countries over 1973 to 2005, this article finds that the liberalization of capital accounts implemented during this period has probably reduced unemployment. The magnitude of the estimated effect is substantial. We control for both endogeneity of capital account regulation and all major determinants of unemployment. The results are robust to variations in specification.

This article studies the effects of the real interest rate on labor market performance. Using a much larger sample of countries and more indicators of labor market performance than have been used in previous articles, it finds that a rise in the real interest rate increases the unemployment rate, raises the share of long-term unemployed, and reduces the employment rate. The magnitude of these effects is very small in the short run but much more pronounced—though still fairly small—in the long run. Young people are disproportionately affected. The results are robust to variations in specification.

Using data on 74 countries and a large number of controls, this paper finds that a higher degree of ethnic fractionalization is correlated with a higher unemployment rate. This is probably mainly because fractionalization reduces labor market efficiency.

Using data on 68 developing countries from 1979 to 2008 and controlling for a wide array of factors, this paper finds that a rise in the real interest rate increases the unemployment rate and decreases the employment rate. The magnitude of these effects is small. The results are robust to variations in specification.

Using data on 53 countries, this paper studies the unemployment effects of the far-reaching banking liberalization that many countries engaged in between the late 1970s and the early 2000s. According to the regression results, this liberalization substantially decreased unemployment, particularly among young people. The lowering of barriers to the entry of foreign banks, new domestic banks and non-bank financial intermediaries, and the reduction in state ownership, had the strongest effects. There is some, albeit weak, evidence that the cutback in interest rate controls has decreased unemployment as well. The results are robust to both endogeneity and numerous variations in specification.

Using data on 78 countries over 1980 to 2008 and a host of controls, this paper finds that switching from a floating regime to a pegged or an intermediate regime is likely to substantially reduce unemployment. Using a three-way regime classification, the estimated effect of switching to a pegged (to an intermediate) regime is around two percentage points (around one percentage point) after 2 years. These results are robust to variations in both specification and three-way classification. When using a four-way classification, we find evidence that switching from a float to a hard peg is most likely to reduce unemployment.

By using data on 21 industrial countries from 1984 to 2006 and a large number of controls, this paper studies the unemployment effects of one major characteristic of the financial system: its level of sophistication, that is, the variety of financial institutions and instruments available to the economy. The paper finds that a higher level of sophistication is likely to reduce unemployment among the total labour force as well as among high-skilled workers. The magnitude of both effects appears to be modest. By contrast, financial system sophistication does not appear to affect unemployment among low-skilled workers. Copyright © 2012 John Wiley & Sons, Ltd.

Using data on 21 industrial countries from the period 1987 to 2009 and a large number of controls, this paper finds that a more concentrated banking sector is likely to raise the unemployment rate and reduce the employment rate. The magnitude of these effects appears to be moderate. The results are robust to potential endogeneity of the bank concentration variable as well as to numerous variations in specification. They are important because, as a consequence of the recent global financial crisis, many industrial countries have experienced both an increase in banking system concentration and a deterioration in labor market performance. (JEL E24, G21, J64, L16) I. INTRODUCTION Many theoretical and empirical studies analyze the impact of banking system concentration on financial intermediation and economic development. By contrast, there are no studies on the effects banking system concentration may have on labor market performance. The topic is important because, as a result of the recent global financial crisis, many industrial countries have experienced both an increase in bank concentration and a deterioration in labor market performance. This paper empirically studies the effects of banking system concentration on labor market performance in industrial countries. Section II briefly summarizes the results from previous theoretical and empirical studies that are relevant for this paper. Based on these studies, it also conjectures about possible effects of banking system concentration on labor market performance. Section III describes both our measure of banking system concentration and our control variables. Section IV describes our dependent variables, sample and estimation method. Section V presents and discusses the regression results. Section VI concludes. II. RELATED LITERATURE Some theoretical studies argue that a more concentrated banking industry may be beneficial to economic development because banks with monopoly power have a greater incentive to forge and maintain long-term relationships with firms, facilitating their access to credit (Mayer 1988, 1990; Petersen and Rajan 1995). This in turn may foster long-term investment and economic development (Dewatripont and Maskin 1995). Indeed, several historical studies suggest that a concentrated banking industry had a favorable impact on economic development in several countries such as Italy (Cohen 1967), Japan (Mayer 1990), France, and Germany (Gerschenkron 1962). Conversely, one may argue that a highly concentrated banking sector reduces competition, increases inefficiencies and harms firms' access to credit, dampening economic development. Pagano (1993), for example, highlights these effects in a simple endogenous growth model. Several empirical studies find that a more concentrated banking system increases the cost of intermediation and dampens growth. For example, using data on 80 countries from 1988 to 1995, Demirguc-Kunt and Huizinga (1999) find that a higher concentration ratio leads to higher interest margins. According to Corvoisier and Gropp (2002), who use data on ten western European countries for the period of 1993-1999, increasing concentration may have led to collusion and higher interest margins for loans and demand deposits. Using data on 41 countries from 1980 to 1996, Cetorelli and Gambera (2001) find that bank concentration has a depressing effect on overall economic growth. According to Carlin and Mayer (2003), who use data on 14 industrial countries over the period of 1970-1995, banking system concentration is negatively associated with growth of equity-financed and skill-intensive industries. Using data from 1976 to 1994, Black and Strahan (2002) find evidence across U.S. states that higher bank concentration leads to a decline in business formation. Given these previous studies, the impact of a more concentrated banking sector on labor market performance may be either beneficial or detrimental. …

Using annual data on 20 industrial countries over the period from 1972 to 2003, this article analyses the impact of inflation volatility on unemployment. It finds that higher volatility over the previous 10 years is associated with a higher unemployment rate in the current year. The effect appears to be small in the short run and medium sized in the long run. The results are robust to variations in specification and sample size. The magnitude of the effect is not smaller if the sample is limited to the more recent sub-period of comparatively low inflation volatility.

Using annual data on nineteen industrial countries for the period 1979–2005 and a large number of controls, this article is the first to empirically study the impact of corporate taxes on the unemployment rate. In contrast to previous empirical research on the labor demand, investment and growth effects of corporate taxation, which consistently finds adverse effects, the regression results suggest that higher corporate taxes may have a favorable impact, lowering the unemployment rate. The magnitude of the estimated effect is substantial. The results of this study are robust to both endogeneity and numerous variations in specification.

PurposeThis paper aims to analyze how financial system turmoil affected unemployment in industrial countries during the period 1982 to 2003.Design/methodology/approachThe paper uses annual data on 17 industrial countries. It employs the International Monetary Fund's financial stress index and a large number of controls.FindingsThe paper finds that, during the sample period, financial market turmoil had only moderate adverse effects on unemployment. Stress in the banking sector and stress in foreign exchange markets were particularly likely to increase unemployment, although the relevant effects were modest too. Turmoil in securities markets affected unemployment only slightly. The results are robust to variations in specification.Originality/valueWhile previous papers only look at a small number of banking crises, this paper's sample includes crises in all major areas of the financial sector. Furthermore, whereas previous papers cover only major crises, it additionally takes both minor crises and periods of relative calm into account. Finally, this paper is the first to statistically control for the impact of all major determinants of labor market performance.

Using data on 17 industrial countries from 1982 to 2003 and controlling for a wide array of factors, this paper finds that higher exchange rate volatility increases the unemployment rate. The magnitude of the effect is small. The results are robust to variations in specification.

Using data on 20 industrial countries for the period 1982 to 2003, this article finds that more active stock markets are likely to lower the unemployment rate. The magnitude of the effect appears to be modest but noticeable. We control for both endogeneity of stock market activity and all major determinants of unemployment. Our results are robust to variations in specification.

Using data on 20 industrial countries over the period 1982 to 2003, this article finds central bank independence to favorably affect both unemployment and employment rates. The size of these effects appears to be substantial, particularly in the long term. In contrast to some of the previous literature, the article finds that the favorable effects of central bank independence do not depend on the degree of wage bargaining centralization or coordination. Furthermore, it finds that higher centralization as well as higher coordination of wage bargaining may also have favorable direct effects on labor market performance.

This paper finds that more readily available venture capital is likely to have lowered unemployment rates and raised employment rates in industrial countries over the period 1982 to 2003. More readily available venture capital is also likely to have lowered the share of long-term unemployed in the total number of unemployed. The magnitude of the effects appears to have been substantial. To measure access to venture capital, we use answers from surveys of senior business executives. We also employ a large number of control variables. Our regression results are robust to variations in specification and sample size.

We use the results of surveys among senior business executives to measure the strictness of hiring and firing regulations. The survey data are more likely than objective indicators (used in almost all previous studies) to correctly capture the de facto strictness of these regulations and their relevance to the performance of the labour market. Using data from 19 industrial countries for the period 1992 to 2002, we find that more flexible regulations are likely to lower unemployment and to increase employment rates. While the effects on the general population appear to be modest, the effects on female, young and low-skilled workers seem to be substantial.

Using data from 76 countries and a large number of controls, this paper analyses how geographical characteristics affect labor market performance. We find that different geographical characteristics have very different effects. While a larger share of highly fertile soil appears to lower employment and increase unemployment, more abundant mineral resources seem to increase employment without affecting unemployment. A larger share of tropical area is associated with higher employment and lower unemployment rates. Neither proximity to the ocean, or to ocean-navigable rivers, nor elevation appears to affect labor market outcomes. Eastern Economic Journal (2009) 35, 190–208. doi:10.1057/eej.2008.11

Using data on 73 economies for the years 2000 to 2003, this paper empirically analyzes the effects of labor regulation on unemployment around the globe. According to the regression results, stricter regulation generally appears to increase unemployment. Tight hiring and firing rules and military conscription most clearly seem to have adverse effects. More centralized collective bargaining seems to increase female unemployment. The size of most effects appears to be substantial, particularly among young people. However, we do not find statistically significant effects of minimum wages or unemployment benefits. Our results are robust to variations in specification. Journal of Comparative Economics 37 (1) (2009) 76–90.

Using data from 45 countries for six years in the period 1995 to 2003, the author analyses whether the quality of industrial relations affects unemployment in developing countries. To measure the quality of industrial relations, the author uses the results of surveys in which senior business executives characterized the industrial relations of their countries of residence. According to the regression results, cooperative (confrontational) industrial relations are likely to lower (increase) unemployment. In general, the magnitude of the effect appears to be moderate. It seems to be small among women. The results are robust to variations in specification.

Using data from 58 countries and the period 1980 to 2003, this paper analyzes how the size of government affects unemployment in developing countries. According to the regression results, a large government sector is likely to increase unemployment. A large share of government consumption in total consumption and a large share of transfers and subsidies in GDP most clearly appear to have a detrimental effect. By contrast, we do not find evidence that dominant state-owned enterprises and a large share of public investment in total investment affect unemployment, neither for bad nor for good. The results are robust to variations in specification and estimation method.

Using data from 69 countries for the years 2000 to 2003, we find that more cooperative industrial relations are likely to reduce the unemployment rate among the total labor force as well as among female and young workers. Furthermore, they appear to lower the share of long-term unemployed in the total number of unemployed.

Using data from 52 developing countries, this article analyses how the size of government affects unemployment. It tackles the reverse causality issue by instrumenting for the government size variable. According to the regression results, a large government sector is likely to increase the unemployment rate. The magnitude of the effect appears to be substantial, both among the total labour force as well as among women and young people. Furthermore, the estimates indicate that a large government sector is likely to substantially increase the share of long-term unemployed in the total number of unemployed. The results are robust to variations in specification.

Using data from 74 industrial, developing and transition countries for the years 2000–2003, this paper analyzes empirically whether and to what extent anticompetitive business regulations affect the performance of the labor market. According to the regression results, they appear to increase unemployment rates and lower employment rates. It seems that they particularly worsen the employment situation of young people. Our results are robust to variations in specification.

SUMMARY Using data from 74 industrial, developing and transition countries for the years 2000 to 2003, this paper empirically analyzes whether and to what extent credit market regulations affect the performance of the labor market. According to the regression results, anti-competitive credit market regulations have an adverse, though generally modest, impact on the labor market. Specifically, restrictions on credit extended to the private sector, on the private ownership of banks, on competition from foreign banks, and on the free determination of interest rates appear to lower the level of employment and increase unemployment, particularly among young people.

Using data from 19 industrial countries for the period 1985–2002, this paper analyses whether the quality of industrial relations affects unemployment and employment rates. To measure the quality of industrial relations, we use the results of surveys in which senior business executives characterized the industrial relations of their countries. Controlling for the impact of major labour market institutions, the business cycle, the level of economic development, unobserved country effects, as well as endogeneity, we find that cooperative industrial relations are likely to lower unemployment and to increase employment. The effects appear to be large, particularly among young people.

This article examines five types of labour market institutions: statutory minimum wages, working-time regulations, hiring and firing regulations, trade unions and industrial relations. It uses the results of surveys that were carried our between 1996 and 2001 among senior business executives from 12 transition countries. In these surveys the managers characterised the institutions of their respective countries. The article conducts multivariate regressions incorporating the survey results and finds that high statutory minimum wages, strict working-time regulations, tight hiring and firing regulations, powerful unions as well as confrontational industrial relations lead to higher unemployment and lower employment, mainly among the problem groups of the labour market: the low-skilled, the long-term unemployed, young people and women.

Over the next few years, Poland, Hungary and the Czech Republic will experience fundamental structural changes in their economies, not least because of their accession to the European Union. The economic adjustment processes that will take place in these countries require a high degree of labour market flexibility. This paper analyses whether the labour markets in Poland, Hungary and the Czech Republic are flexible enough for these processes to take place smoothly. In particular, it discusses the following areas: labour force participation, qualification and regional mobility of the labour force, wage-setting systems and statutory minimum wages, labour taxes, government regulations affecting working time and protection against dismissal, and public job-placement services. The paper reveals that there are impediments to labour market flexibility in all of these areas. It also shows that the specific rigidities vary from country to country, both in nature and in intensity. Comparative Economic Studies (2004) 46, 272–310. doi:10.1057/palgrave.ces.8100026

Eckbo, Masulis, & Norli (2000) question previous examination of initial public offering (IPO) underperformance with the keen argument that the increase in the number of traded shares and the infusion of equity reduce two significant premia in the stock’s return, namely, liquidity risk and financial risk. The new market for high (expected) growth stock in Germany is examined for evidence of underpricing, underperformance, and liquidity improvements during the first two complete years of operation – 1998 and 1999. The initial trading period examines the offering day and also the first ten days of trading (for the investor who can not get allocation but enters the secondary market). The postissue performance study period is taken as the 5‐day period one‐year after the IPO. Using regression of four underpricing measures upon issuing firm characteristics deemed important from the extant literature, we seek to explain the degree of underpricing discovered. We find that substantial underpricing occurs and performance is high one year later, even adjusted for the German market return for the period or the firm‐specific sector performance for the same period. Trading dwindles for most stocks after the offering day. One year later, the trading of the stock is even lower. We do find that the more active the trading in the initial period, the greater the returns and trading one year after.

Portugal, Germany and France have significantly exceeded the 3 per cent ceiling for government deficits, a central requirement of the European Stability Pact. Italy has come very close to doing so. All four countries are far from achieving medium–term budgetary positions that are close to balance or in surplus, the Pact's main goal. This article analyses what caused this development and asks whether there are any reasons to justify it. Furthermore, it briefly analyses whether those countries that have consistently consolidated their public budgets were forced to accept a lower rate of economic growth, or whether they had to cut back massively on public investment.

This paper studies the effect of banking system concentration on unemployment in developing countries. Using data on 42 developing countries, it finds that more concentration increased unemployment over the period 1987–2007. The magnitude of the effect is substantial. The result is robust to both endogeneity of the bank concentration variable and numerous variations in specification. It is important because many developing countries are characterized by high levels of both banking system concentration and unemployment.

This article analyses and evaluates all types of active and passive labour market policies which have been pursued in East Germany during its transition from a centrally planned to a market economy. To this end, the article makes full use of the numerous, mostly German studies which have been carried out over the past years and which each mostly analysed only one type of labour market policy. The article shows that several of these labour market policy programmes did not improve the participants' position on the labour market; frequently, they even worsened it. In addition, most types of labour market policies had negative side-effects on non-participating unemployed as well as on regular employees. Based on this outcome, the article also draws fundamental policy conclusions.

In order to smooth the transition from a planned to a market economy, labour market policies were applied to an unprecedented extent in East Germany. This paper analyses the effects of these policies. As it turns out, labour market policies not only were largely unsuccessful; in many cases they were even prejudicial to the unemployed as well as to regular employees.

This article studies the effects of venture capital on the performance of the labour market. Using data from a much larger sample of countries than previous papers, it finds more readily available venture capital to favourably affect both the unemployment and the employment rate. The magnitude of the estimated effects is substantial. We control for both endogeneity of venture capital availability and most major determinants of labour market performance. The results are robust to variations in specification.

As demonstrated by the last European Union summit meetings, the heads of government and of state of the EU's member states appear firmly intent on starting the planned monetary union on schedule on 1st January 1999. The statements they make, and also any pamphlets and advertisements published by their governments and the European Commission, tend to concentrate one-sidedly on the purported advantages of monetary union. Nevertheless, in most EU countries plans for monetary union are greeted with scepticism or disapproval by a large section of the general public. There are good reasons for this reaction because, as will be explained below, European Monetary Union is in fact associated with serious economic and political risks.

Using data from 80 countries, this article analyzes whether Protestant religion affects labor market outcomes. Controlling for the impact of labor market regulations, business regulations, the tax burden, the business cycle, the level of economic development, demographic and geographical conditions, wars, and the transition from planned to market economy as well as unobserved country and year effects, we find that countries in which the largest portion of the population practices Protestant religion have substantially higher labor force participation and employment rates, particularly among women. We obtain the same result for a subgroup of 19 industrial countries for which we have better data to control for the impact of labor market institutions and business cycle fluctuations.

In European Monetary Union (EMU) with its decentralized fiscal policies there is a strong bias towards large chronic budget deficits. Having a common currency implies that a member country running high fiscal deficits does not have to bear the full cost of doing so. In particular, high deficits in an individual member country are unlikely to cause a rise in that country’s interest rates. If interest rates rise, they rise in the whole currency area. Thus each individual member state can shift part of the cost of its own fiscal profligacy on to other member countries. However, large chronic budget deficits and the ensuing rising debt-to-GDP ratios are harmful. They crowd out private investment and thus lower long-term economic growth. Furthermore, sooner or later they may induce governments to put pressure on the European Central Bank (ECB) to permit higher inflation in order to erode the real value of the debt. These adverse effects of national fiscal policies make it necessary to effectively limit budgetary deficits of EMU member states. They are the fundamental justification for the Stability and Growth Pact (‘Stability Pact’ for short).

In almost all countries, the transition from a centrally planned economy to a market economy caused high unemployment. The governments attempted to ease the changeover to a market economy for the unemployed by introducing several passive and active labour market policies. This paper first points out which effects were to be expected of such policies from the perspective of Austrian Economics. These theoretical hypotheses are then tested empirically. It turns out that the hypotheses deducted from Austrian Economics theory are impressively corroborated by the empirical evidence.Dans presque tous les pays, la transition dune economie centralement planifiee vers une economie de marche ont provoque un chomage eleve. Les gouvernements ont essaye dadoucir la transition vers une economie de marche pour les chomeurs en introduisant plusieurs politiques passives et actives sur le marche du travail. Tout dabord, cet article souligne quels etaient les effets attendus de telles politiques a la lumiere de leconomie autrichienne. Ces hypotheses theoriques sont ensuite testees de maniere empirique. Il en ressort que les hypotheses deduites de la theorie economique autrichienne sont corroborees de maniere significative par les preuves empiriques.