Abstract

The objective of this work is to investigate the relationship between some institutional factors - such as the degree of legislative protection of the workplace, unemployment benefits, wage bargaining - and unemployment. The hypothesis to be tested is that institutional factors per se do not add to the "rigidity" in the functioning of the free market but, if well managed, may serve the purpose of unemployment governance. The empirical test implemented in this paper starts with the cluster analysis, based on the ECB data for twenty OECD countries, with a view to group countries according to their institutional characteristics. We then proceed by estimating the effects of institutional variables considered on unemployment rates, referring to two phases: the pre-crisis period (2005-2008) and the three years of 2009-11.