Labour Market Institutions and Unemployment: Does Finance Matter?

Rault, Christophe; Vaubourg, Anne‐Gaël

doi:10.1057/ces.2011.28

Cited by 4 publications

(3 citation statements)

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“…Taken together, the evidence on equity finance and intermediated finance suggests potential trade-offs in employment effects, depending on the labour market context. Rault and Vaubourg (2011) suggest finance may affect the relationship between labour institutions and unemployment, but the effect appears country-specific and the results imply other forces not captured in their models may be at work. They use data on 18 OECD countries over 1980-2004 to assess whether finance indirectly affects unemployment by testing for Granger causality running from labour market indicators to unemployment for each country.…”

Section: Jes 476mentioning

confidence: 90%

“…Finance interacts with labour market characteristics to help determine unemployment. Credit and equity finance may have distinct effects on unemployment because they interact differently with labour institutions Rault and Vaubourg (2011) Granger causality tests and panel VAR models Finance affects the link between labour institutions and unemployment in complex ways. Effects vary by country Note(s): FD is financial development; DSGE is dynamic stochastic general equilibrium; LBO is leveraged buyout; DD is difference-in-differences; ES is employment sensitivity; OLS is ordinary least squares; IV is instrumental variable; GMM is generalised method of moments; VAR is vector autoregression; 3SLS is threestage least squares; CRT is chain reaction theory Table 1.…”

Section: Jes 476mentioning

confidence: 99%

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How does finance influence labour market outcomes? A review of empirical studies

Heil

2020

JES

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PurposeThis paper reviews economic studies on the effects of various aspects of finance on labour market outcomes.Design/methodology/approachThe paper is a systematic literature review that reviews the weight of the evidence on the relationships between specific elements of finance and labour outcomes. The review is divided into three major sections: (1) job quantity and job quality; (2) distributional effects; and (3) resilience and adaptability.FindingsFinance interacts with labour market institutions to jointly determine labour outcomes. Firm financial structures influence their labour practices – highly leveraged firms show greater employment volatility during cyclical fluctuations, and leverage strengthens firm bargaining power in labour negotiations. Bank deregulation has mixed impacts on labour depending upon the state of prior bank regulations and labour markets. Leveraged buyouts tend to dampen acquired-firm job growth as they pursue labour productivity gains. The shareholder value movement may contribute to short-termism among corporate managers, which can divert funds away from firm capital accumulation toward financial markets, and crowd out productive investment. Declining wage shares of national income in most OECD countries since 1990 may be driven in part by financial globalisation. The financial sector contributes to rising income concentration near the top of the distribution in developed countries. The availability of finance is associated with increased reallocation of labour, which may either enhance or impede productivity growth. Finally, rising interest rate environments and homeowners with mortgage balances that exceed their home's value may reduce labour mobility rates.Originality/valueThis review contributes to the understanding of the effects of finance on labour by reviewing and synthesising a large volume of literature.

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Section: Jes 476mentioning

confidence: 90%

Section: Jes 476mentioning

confidence: 99%

How does finance influence labour market outcomes? A review of empirical studies

Heil

2020

JES

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“…Credit and equity finance may have distinct effects on unemployment because they interact differently with labour institutions. Rault and Vaubourg (2011) Granger causality tests and panel VAR models.…”

Section: Unemploymentmentioning

confidence: 99%

How does finance influence labour market outcomes?

Heil¹

2018

OECD Economics Department Working Papers

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This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2 │ ECO/WKP(2018)43 HOW DOES FINANCE INFLUENCE LABOUR MARKET OUTCOMES? A REVIEW OF EMPIRICAL STUDIES Unclassified OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s). Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.

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Unemployment and Financial Development: Evidence for OECD Countries

Afonso,

Blanco-Arana

2023

Comp Econ Stud

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Labour Market Institutions and Unemployment: Does Finance Matter?

Cited by 4 publications

References 42 publications

How does finance influence labour market outcomes? A review of empirical studies

How does finance influence labour market outcomes? A review of empirical studies

How does finance influence labour market outcomes?

Unemployment and Financial Development: Evidence for OECD Countries

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