Working Paper BETA #2020-47

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Title : Reforms of Collective Bargaining Institutions in European Union Countries: Bad Timing, Bad Outcomes?

Author(s) : Yann Thommen

Abstract : This paper investigates whether flexibility-enhancing reforms of national collective bargaining systems have positive outcomes in terms of employment and unemployment in the short-term, especially when implemented during an economic downturn. The analysis consists in applying local projections to a novel panel database of reforms of collective bargaining institutions in EU countries in the period 2000-2018. There is no evidence that making collective bargaining institutions more flexible during a recession has a positive effect on employment or unemployment in the short term. More specifically, reforms that reduce bargaining coverage have negative short-term effects, particularly on the employment of young people and low-educated workers, and are associated with a decline in the share of temporary jobs. The results do not support the idea that collective bargaining institutions should be reformed during a recession to boost employment.

Key-words : Employment, Unemployment, Short-term effects, Labor market, Collective bargaining, Reforms

JEL Classification : E24, E32, J08, J21, J5