Who bears the brunt? The impact of banking crises on younger and older workers  

How do workers in different age groups fare on the labor market when a banking crisis occurs? Using data on 41 banking crises in 38 developed countries between 1990-2014, we examine how banking crises affect the labor market position of workers from five different age groups (including those aged 65 years and older) and whether employment protection legislation shields workers from unemployment. Results show that unemployment increases for all age groups 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 close to retirement 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.