Working Paper (2012-02), Adjusting employment during the crisis: An international and sector based comparison
Much comparative research has addressed the topic of labour markets’ responses during the current crisis. The German employment “miracle”(little employment adjustment to the sharp decline of GDP) and, more generally, strategies of internal flexibility aiming at containing job losses (labor hoarding) have been analysed on the light of both, labor markets’ patterns (using econometric specifications) and public policies implemented during the crisis. Much of this research concludes on a wide range of mechanisms of employment adjustment.
In this paper, we use standard econometric specifications of employment and present a rather new and comprehensive comparative reading of macro-sectoral developments and adjustments of employment in eight industrialized countries over a period ending in 2011. We investigate cross countries differences in labour market performances during the crisis but also cross industries performances, which stands out as a new result. Furthermore, this approach allows us to better identify the employment dynamics which diverge from their structural trends as well as their main determinants. Finally, it gives a more comprehensive picture, considering the current challenges facing most industrialized countries on the front of employment : is the adjustment over? Considering the nature and magnitude of the crisis, did it affect the functioning of the labour markets and how ? What are the hysteresis effects and their long term impact on economic growth ? Which policies should be implemented in order to remedy the potential structural effects created and to conclude the employment adjustment process ? What are the
major weaknesses left ? Which rooms for maneuver for both firms and governments?
- Keywords: Economic crisis ; Cross country differences ; Labour markets; Employment; Activity by industry; Employment policy; Productivity; Econometrics.
- Authors: Christel Gilles, Jean-Paul Nicolaï