Gerhard Rünstler (Monetary Policy Research, European Central Bank) holds a talk on “The Macroeconomic Impact of Euro Area Labour Market Reforms: Evidence from a Narrative Panel VAR” on Mon. May 22, 2023 at 4:15pm in B01.0.203 (Lakeside Park). Guests welcome!
Abstract
Using new quarterly narrative evidence, this paper examines the macro-economic impact of reforms of unemployment benefits (UB) and employment protection legislation (EPL) in the euro area from a Bayesian narrative panel VAR. The approach complements existing micro-econometric evidence by aligning short- and medium-term effects in a unified framework and assessing state dependencies. Liberalizing reforms result in temporary wage declines and highly persistent increases in economic activity and employment. In contrast to UB reforms, the effects of EPL reforms on employment emerge only gradually.