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Table 7 Impact of consolidations on job separation rates, distinguishing by EPL strictness

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

  (1) (2) (3) (4) (5) (6) (7) (8)
Dependent variable: job separation rate Budget balance Revenue Expenditure “Top-down” change in structural balance
  Action-based Action-based Action-based  
Explanatory variables 13 EU countries, 1997-2009 13 EU countries, 1997-2009 13 EU countries, 1997-2009 21 EU countries, 1997-2009
  Low EPL High EPL Low EPL High EPL Low EPL High EPL Low EPL High EPL
Separation rate (1 lag) 0.207 0.795** 0.233 0.794** 0.224 0.790** 0.608** 0.782**
  [1.293] [14.15] [1.351] [15.35] [1.395] [11.74] [4.938] [17.48]
Fiscal policy variable 0.0662** −0.00522 0.122** −0.0315 −0.112** −0.0226 0.0618** −0.0369
  [5.454] [−0.151] [6.081] [−0.573] [−4.972] [−0.370] [3.635] [−0.727]
Constant 0.588** 0.156* 0.701** 0.155* 0.703** 0.0114 0.207+ 0.0207
  [4.401] [3.654] [4.737] [3.781] [5.040] [0.191] [2.009] [0.209]
Observations 66 49 66 49 66 49 104 81
R-squared 0.566 0.842 0.566 0.843 0.551 0.842 0.669 0.766
Number of countries 7 6 7 6 7 6 11 10
  1. +, *, ** denote statistical significance at the 10, 5, 1 per cent level respectively. T tests are reported in square brackets.
  2. Specification. All regressions include country and year fixed effects.
  3. 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.
  4. Legend. Fiscal variables: see footnote to Table 1. The grouping of countries with respect to the OECD EPL indicator for permanent employment is built on the basis of the median country-specific average value of the indicator over the sample period.