TY - BOOK AU - FuChen, Yu AU - Snower, Dennis AU - Zoega, Gylfi TI - Labour-marketInstitutionsand MacroeconomicShocks KW - Labour Market KW - MacroeconomicShocks KW - European Unemployment Problem KW - OECD N2 - Macroeconomicshocksandlabour-marketinstitutionsjointlydetermineemploymentgrowthandeconomicperformance.Theeffectofshocks dependscnthenatureoftheseinstitutionsandtheelTec tofinstitutionalchange dependsonthemacroeconomicenvironment.I tfollowsthatagivensetofinstitutionsmaybeappropriatei noneepochandnotinanother.Wederiveadynamic modeloflabourdemandinwhichtheetTec toffiringcostsonlabourdemand dependsonthemacroeconomicenvironment:whentheleve lofmacroeconomic activityisexpectedtodropand/orthetrendrateofproductivitygrowthi ssmall. arisei nfiringcostsaffectsmainly(andadversely)thehiringdecisionandnotthe layof fdecision.Thismakesfiringcostsharmfultoemploymentwheni tmayappear mostappropriate.Incontrast,firingcostscanraiseemploymentduringperiodsof highgrowthandpositiveshocks.Ourhypothesisissupportedbyempiricalresults usingOE("Ddata ER -