Cross-Cutting Themes in Employment Experiences During the Crisis

Policy Papers, October 8, 2010

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Cross-Cutting Themes in Employment Experiences During the Crisis

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Bibliographic details

• Published: October 8, 2010
• Series: Policy Papers

Summary

• The paper analyzes the recent employment experiences of six economies: Germany, Korea, Mexico, New Zealand, Spain, and Sweden.
• These economies represent a wide range of labor market institutions, policy responses, and outcomes to the crisis.
• The divergence of labor market outcomes and of the effectiveness of policies during the crisis is attributed to the interaction between the nature of the shocks and differences in the structure and institutions of each country’s economy.
• The worst job losses compared to the drop in output followed permanent shocks, particularly in dual labor markets and in the presence of wage rigidities.
• Policies to avoid job cuts were much more effective when they were well-targeted and responded to temporary shocks.
• Policies to facilitate labor movements were more appropriate following permanent shocks.

Key findings

• Cross-country differences in employment trends during the crisis can be explained by:
  • The nature of the shocks (temporary vs. permanent).
  • Country-specific labor market structures and institutions (including dual labor markets and wage rigidities).
• Outcomes and policy effectiveness varied widely across the six studied economies: Germany, Korea, Mexico, New Zealand, Spain, and Sweden.

Policy implications and recommendations

• Implement well-targeted policies to avoid job cuts when shocks are temporary.
• Prioritize policies that facilitate labor movements (mobility, reallocation) when shocks are permanent.
• Consider country-specific labor market structures (e.g., presence of dual labor markets, wage rigidities) when designing crisis-response labor policies.

Scope and context

• Subject areas highlighted: Cross country analysis; External shocks; Financial crisis; Labor market policy; Labor markets; Unemployment.
• Geographic focus: Germany; Global Financial Crisis 2008-2009; Korea, Republic of; Mexico; New Zealand; Spain; Sweden.

Cross-Cutting Themes in Employment Experiences During the Crisis (October 8, 2010) — International Monetary Fund.

Content in this bundle

• Cross-Cutting Themes in Employment Experiences during the Crisis; IMF Policy Paper; October 8, 2010
  • Cross-Cutting Themes in Employment Experiences during the Crisis; IMF Policy Paper; October 8, 2010 (Markdown version)
  • Cross-Cutting Themes in Employment Experiences during the Crisis; IMF Policy Paper; October 8, 2010 (PDF)