Fiscal consolidation and unemployment: does EPL matter?: A look at EU countries

Table 4 Impact of consolidations on job finding rates

	(1)	(2)	(3)	(4)
	Action-based fiscal policy variables, 13 EU, 1997-2009			“Top-down” fiscal policy variables, EU27, 1997-2010
Dependent variable: job finding rate	Budget balance	Revenue	Expenditure	Change in structural balance
	Action-based	Action-based	Action-based
Explanatory variables
Job finding rate (1 lag)	0.718**	0.718**	0.720**	0.666**
	[9.340]	[0.0779]	[0.0751]	[9.360]
Fiscal policy variable	−0.305	−0.516	0.523	−0.259
	[−1.389]	[0.338]	[0.357]	[−1.116]
Constant	3.449**	3.445**	3.440**	3.265**
	[4.136]	[0.838]	[0.824]	[5.213]
Observations	115	115	115	229
R-squared	0.594	0.594	0.593	0.522
Number of countries	13	13	13	27

+, *, ** denote statistical significance at the 10, 5, 1 per cent level respectively. T tests are reported in square brackets.
Specification. All regressions include country and year fixed effects.
Estimation method. Action-based fiscal policy: fixed effect panel OLS. Top-down fiscal policy measures: fixed effect panel instrumental variables (the fiscal policy variable is instrumented with its own lag, the lagged output gap, and the lagged government debt/GDP ratio). Standard errors are robust with respect to hetereoschedasticity and non-independence within country clusters.
Legend. Fiscal variables: see footnote to Table 1.