Do flexible working hours amplify or stabilize unemployment fluctuations?

Employment to output elasticities and reforms towards flexicurity: Evidence from OECD countries

“…The asymmetry found in Europe is consistent withKolasa et al (2021), who find that-against the conventional viewhours per worker in European countries are much less procyclical than in the United States, and in some economies even comove negatively with output. This means that hours per worker may increase in Europe in times of negative shocks, aggravating the upward pressure on unemployment.12 We generate the GDP growth cycle for each country with the band-pass filter ofBaxter and King (1999) and identify…”

“…The literature on business cycle asymmetry documents that asymmetric labor market rigidities can amplify the business cycle in downturns, meaning that employment and output rise slowly in the expansionary and fall fast in the contractionary phases of the cycle (Abbritti & Fahr, 2013;McKay & Reis, 2008). It is also shown that in most European countries the degree of this asymmetry is larger for employment than for output, implying that the employment-to-output elasticity of these countries is larger during economic downturns than during expansions (Abbritti & Fahr, 2013;Kolasa et al, 2021). 11 We use our empirical model to carry out a simple test for the presence of such asymmetries.…”