Does increased flexibility in labour institutions makes labour markets more resilient to recessions? The new CGR working papers by Prof Pedro Martins present positive evidence

Recessions hit hard and fast while wages and labour conditions are sticky and difficult to adapt, which tends to lead to high unemployment levels during business cycle downturns. We can see an example of this in the unemployment levels of some European economies.  According to Eurostat, Spain had an unemployment rate of the 22.7% in April 2015, a rate that skyrocketed from 8.1% in January 2008. Similarly Greece’s unemployment rate went from 8% in 2008 to 25.6% in 2017. Portugal has also experienced a bumpy ride, albeit a more moderate one. The unemployment rate started at similar levels to Spain and Greece in 2008, peaked around 17.5% in January 2013 and start decreasing afterwards down to 13% in April 2015.

Read More »