Arbeitspapier
The rise and fall of Spanish unemployment: A chain reaction theory perspective
The evolution of Spanish unemployment has been quite idiosyncratic. The full-employment levels of the early seventies were followed by unemployment rates that were the highest within the OECD countries in the aftermath of the oil price shocks. While unemployment was extremely persistent in most of the eighties and nineties, it experienced its sharpest decline in recent years. We investigate the determinants of this unemployment trajectory using the analytical framework of the chain reaction theory (CRT). We show that unemployment may not gravitate towards its natural rate due to frictional growth, a phenomenon that arises from the interplay of lagged adjustment processes and growing exogenous variables in a dynamic system with spillovers. The empirical analysis distinguishes four periods: (i) 1978-1985, (ii) 1986-1990, (iii) 1991-1994, (iv) 1995-2005, and finds that capital accumulation is a crucial driving force of unemployment. Thus, our theoretical and empirical results question the key role of the natural rate in policy making.
- Sprache
-
Englisch
- Erschienen in
-
Series: Working Paper ; No. 633
Investment; Capital; Intangible Capital; Capacity
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Labor Force and Employment, Size, and Structure
frictional growth
chain reaction theory
capital accumulation
impulse response function
Arbeitslosigkeit
Volatilität
Investition
Spanien
Sala, Hector
- Handle
- Letzte Aktualisierung
-
20.09.2024, 08:23 MESZ
Objekttyp
- Arbeitspapier
Beteiligte
- Karanassou, Marika
- Sala, Hector
- Queen Mary University of London, Department of Economics
Entstanden
- 2008
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