Do the Institutional Features of the Labour Market Provide a Norm for Determining the Okun’s Coefficient? A Cross-country Analysis

Abstract

Mainly asserted by the experts, there is a common acceptance that the combination of the institutional features of the labour markets play a crucial role to determine if countries are more volatile in terms of creating and destroying employment. As a continuation of the previous assortment I tried to find out if there is any cross-country empirical relationship which relates the institutional features with the Okun’s coefficient. After estimate the Okun’s coefficients and carry out an analysis of correlation for different explanatory variables, this paper extract the conclusion that the institutional features show a not-so-clear and straightforward correlation for the different market labour features such as the EPL or the temporality, but in an indirect way by explaining the agents adaptability to the status-quo changes when facing the shocks.