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Federal Reserve Bank of Cleveland
Economic Commentary
Labor market rigidity, unemployment, and the Great Recession
Murat Tasci
Mary Zenker
Abstract

Countries with very flexible institutions and labor market policies, like the U.S., experienced substantial increases in unemployment over the course of the Great Recession, while countries with relatively rigid institutions and strict labor market policies, like France, fared better. However, this better short-term performance comes with a tradeoff; evidence suggests that flexible labor markets keep unemployment lower in the long run.


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Murat Tasci & Mary Zenker, "Labor market rigidity, unemployment, and the Great Recession" , Federal Reserve Bank of Cleveland, Economic Commentary, issue June, 2011.
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Keywords: Labor market; Unemployment; Recessions
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