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

Table 10 Impact of consolidations, distinguishing by EPL strictness for temporary employment

	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
Dependent variables	Cyclical unemployment		Job separation rates		Job finding rates		Share of long-term unemployment
Explanatory variables
	Low EPL	High EPL	Low EPL	High EPL	Low EPL	High EPL	Low EPL	High EPL
Dependent variable (1 lag)	1.116**	1.298**	0.667**	0.860**	0.784**	0.704**	0.687**	0.848**
	[24.38]	[15.71]	[6.919]	[17.26]	[5.706]	[14.80]	[6.440]	[14.65]
Dependent variable (2 lags)	−0.573**	−0.673**
	[−11.86]	[−8.563]
Budget balance Action-based	0.135*	0.110+	0.0412*	−0.0167	0.0209	−0.888	0.509	−0.497
	[3.594]	[2.395]	[2.892]	[−0.327]	[0.0519]	[−0.864]	[0.769]	[−1.017]
Constant	0.603*	−0.223**	0.523**	−0.231	4.969**	2.734	4.256	7.252+
	[2.735]	[−4.057]	[7.633]	[−0.727]	[4.330]	[1.042]	[1.451]	[2.255]
Observations	196	157	60	55	60	55	104	102
R-squared	0.885	0.885	0.699	0.785	0.641	0.631	0.887	0.850
Number of countries	7	6	7	6	7	6	7	6

Action-based budget balance.
13 EU countries, 1992–2009.
+, *, ** 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: fixed effect panel OLS, standard errors robust with respect to hetereoschedasticity and non-independence within country clusters.
Legend. Fiscal variables: see footnote to Table 1. The grouping of countries with respect to the OECD EPL indicator for temporary employment is built on the basis of the median country-specific average value of the indicator for years after 2005.