Commencement Program, May (1896)

https://red.mnstate.edu/commencement/1006/thumbnail.jp

Robustness checks.

Note: The figure illustrates the impact of the interaction term between the financial crisis and labor market flexibility on real GDP in developing countries. (a) excludes the data for 2008 and 2009, while (b) incorporates government consumption as a control variable in the regression. In (c), government consumption and mean years of schooling are included as control variables. Moving to (d), the regression accounts for government consumption, mean years of schooling, and net domestic credit as control variables. (e) extends this analysis by adding government consumption, mean years of schooling, net domestic credit, trade openness level, and net inflows of foreign direct investment as control variables. Finally, (f) presents the results when substituting the labor market flexibility indicator.</p

The impact of labor market flexibility on selected industries in developing countries.

Note: The figure illustrates the influence of the interaction term between the financial crisis and labor market flexibility on the value added (% of gross domestic product) within distinct industries in developing countries. (a) displays the outcomes for the construction industry (ISIC F). Moving to (b), we observe the findings for the wholesale, retail trade, restaurants, and hotels industries (ISIC G-H). Shifting focus to (c), we can see the results for the transport, storage, and communication industries (ISIC I). Finally, (d) reveals the outcomes for the remaining industries (ISIC J-P).</p

The effects of the interaction between financial crisis and labor market flexibility on real GDP in developed and developing countries.

The effects of the interaction between financial crisis and labor market flexibility on real GDP in developed and developing countries.</p

S2 File -

This article analyzes cross-country data encompassing 130 countries and regions from 2000 to 2019 to investigate the correlation between financial crises, labor market frictions, and economic volatility. The empirical findings demonstrate that financial crises have a milder impact on real gross domestic product (GDP) in developing countries with flexible labor markets. This trend also applies to non–eurozone developed countries, where labor market flexibility aids crisis mitigation. However, this pattern doesn’t hold for eurozone countries. Further examination of developing nations reveals that those with heightened labor market flexibility tend to experience reduced adverse effects on non-tradable sectors, thereby mitigating the impact on real GDP.</div

The developed countries, tradable and non-tradable sectors included in this paper.

The developed countries, tradable and non-tradable sectors included in this paper.</p

The impact of the financial crisis on the real GDP of the full sample.

Note: The figure illustrates how the financial crisis affected real GDP at various points within the full sample period. The black line signifies the estimated coefficients linked to the financial crisis. At the same time, the shaded region depicts the confidence interval, accounting for a range of plus or minus 1.645 standard deviations of the coefficient.</p

The impact of labor market flexibility on the non-tradable and tradable sectors of developing countries.

Note: (a) and (b) demonstrate the influence of the interaction term between the financial crisis and labor market flexibility on the value added (% of gross domestic product) within developing countries’ non-tradable and tradable sectors.</p

The role of labor market flexibility in the eurozone and non–eurozone countries.

Note: (a) and (b) depict the effect of the interaction term between the financial crisis and labor market flexibility on real GDP in the eurozone and non–eurozone countries.</p

S1 Data -

This article analyzes cross-country data encompassing 130 countries and regions from 2000 to 2019 to investigate the correlation between financial crises, labor market frictions, and economic volatility. The empirical findings demonstrate that financial crises have a milder impact on real gross domestic product (GDP) in developing countries with flexible labor markets. This trend also applies to non–eurozone developed countries, where labor market flexibility aids crisis mitigation. However, this pattern doesn’t hold for eurozone countries. Further examination of developing nations reveals that those with heightened labor market flexibility tend to experience reduced adverse effects on non-tradable sectors, thereby mitigating the impact on real GDP.</div