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Table 8 Impact of consolidations on job finding 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-finding 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, 1997-2010
  Low EPL High EPL Low EPL High EPL Low EPL High EPL Low EPL High EPL
Finding rate (1 lag) 0.845** 0.678** 0.844** 0.672** 0.848** 0.685** 0.822** 0.610**
  [3.872] [13.09] [3.894] [10.59] [3.881] [12.74] [4.587] [9.540]
Fiscal policy variable −0.0134 −1.192 −0.0852 −1.860 −0.0417 1.742 0.122 −1.772*
  [−0.0668] [−1.589] [−0.254] [−1.909] [−0.104] [1.221] [0.876] [−2.285]
Constant −0.283 3.214** 2.764 2.948** 2.738 3.342* −0.0706 3.422
  [−0.0898] [5.319] [1.262] [6.126] [1.243] [3.958] [−0.0338] [1.366]
Observations 66 49 66 49 66 49 104 83
R-squared 0.591 0.662 0.591 0.661 0.591 0.656 0.592 0.586
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.