Labour market transitions, shocks and institutions in turbulent times: a cross-country analysis

Abstract

This paper analyses the impact of the business cycle on labour market dynamics in EU member states and the US during the first decade of the 21st century. Using unique measures of labour market flows constructed from worker-level micro data, we examine to what extent macro shocks were transmitted to national labour markets. We apply the approach by Blanchard and Wolfers (2000) to analyse the role of the interaction of macroeconomic shocks and labour market institutions for worker transitions in order to explain crosscountry differences in labour market reactions in a period including the Great Recession. Our results suggest a significant influence of trade unions in channelling macroeconomic shocks. Specifically, union density moderates these impacts over the business cycle, i.e. countries with stronger trade unions experience weaker reactions of the unemployment rate and of worker transitions.

The Impact of Robots on Labour Market Transitions in Europe

“…machine operators: 7.4; craft and trade workers: 5.8). In the remaining occupations, the growth rate was much lower (e.g., 2.8 for technicians and associates, and 0.11 for service and sales workers).6 F 7 Turning to the labour market variables, we note that job separation and job finding rates are known to display strong variation between countries and over time (Bachmann and Felder 2021). In our sample, the average job separation rate ranged from 1.3% in Sweden to 5.0% in Spain, while the average job finding rate ranged from 30% in Greece to 54% in the UK.7 F 8 At the country level, there was a moderately negative correlation between the changes in the job separation rate and the robot exposure growth rate -0.24, see Figure 3).…”

“…The fluctuations over time are largely driven by cyclical fluctuations(Bachmann and Felder 2021). In several countries in our sample -most importantly in Spain and Portugal -the job separation rates peaked in 2009 due to the Great Recession, and later returned to the pre-crisis levels (see FigureC1in the appendix).…”

“…The respondents report their labour market status in the month they were surveyed, as well as their status one year earlier. Using this information, we follow Bachmann and Felder (2021) to measure transitions from one year to the next between particular labour market states (employment, unemployment, and non-participation) at an individual level. We classify a person as having made a transition from employment (unemployment) to unemployment (employment) if the person reported being employed (unemployed) one year before the survey, and being unemployed (employed) in the month of the survey.…”

The China Shock, Employment Protection, and European Jobs

“…3 By contrast, the labor-market status in the previous year is based on self-perception of the interviewed person. Although these two definitions might not overlap perfectly, using both to identify labor-market flows from one year to the next is preferable to alternative approaches, which would not allow for consistent measurement across countries (see Bachmann and Felder 2020 for details). 4 The EU-LFS data have been used in a related context by a number of other studies, for example, Angrist and Kugler (2003).…”

Unions as insurance: Workplace unionization and workers' outcomes during COVID‐19

“…In addition, there is evidence from two papers that overall employment rates of union workers are higher during times of economic crisis. At the macro level, Bachmann and Felder (2021) find for the US and the EU member states that countries with higher union density experienced lower worker flows into unemployment and had lower unemployment rates during the Great Recession. Closely related to our setting, Han (2022) documents that union workers in the US had higher wages and employment rates than non‐union workers during the COVID‐19 pandemic.…”