INSTITUTIONS, UNEMPLOYMENT AND INACTIVITY IN THE OECD COUNTRIES

This paper provides new evidence on the linkages between a large array of institutional arrangements (on product, labour and financial markets) and employment performance. Our analysis includes unemployment, inactivity and jobless rates, thus allowing us to control for possible substitution effects across situations of non-employment and to check whether institutional rigidities affecting unemployment impact inactivity along the same line. Among other results, we find strong evidence in favor of a positive effect of EPL on employment performance and a substitutability effect across product and labour markets regulation.