Who Bears the Brunt? The Impact of Banking Crises on Younger and Older Workers

Mathijs van Dijk, Harry van Dalen, Martin Hyde

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Abstract

How do young and old workers fare on the labor market when a banking crisis occurs? Using data on 41 banking crises in 38 developed countries over 1990-2014, we examine how banking crises affect the labor market position of workers from five different age groups (including 65 years and older) and whether employment protection legislation shields workers from unemployment. Results show that unemployment increases across the board in the aftermath of banking crises, but much more so for younger workers. The labor force participation of older women increases significantly in the medium run, whereas older men withdraw from the labor market. Countries with strong employment protection legislation shield workers from the impact of banking crises in the short run, but show signs of increases in unemployment rates for young and middle-aged workers in the medium run.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages33
Volume2019-025
Publication statusPublished - 17 Jul 2019

Publication series

NameCentER Discussion Paper
Volume2019-025

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Keywords

  • banking crisis
  • unemployment
  • employment protection
  • age
  • older workers
  • labor force

Cite this

van Dijk, M., van Dalen, H., & Hyde, M. (2019). Who Bears the Brunt? The Impact of Banking Crises on Younger and Older Workers. (CentER Discussion Paper; Vol. 2019-025). Tilburg: CentER, Center for Economic Research.