Unemployment in the EU: Institutions, prices and growth

Arbeitspapier

This Paper presents a reappraisal of unemployment movements in the European Union. Our analysis is based on the chain reaction theory of unemployment, which focuses on (a) the interaction among labour market adjustment processes, (b) the interplay between these adjustment processes and the dynamic structure of labour market shocks, and (c) the interaction between the adjustment processes and economic growth. We divide the shocks into institutional variables, price variables, and growth drivers. Estimating a system of labour market equations for a panel of EU countries, we derive the dynamic unemployment responses to each shock. Our analysis permits us to distinguish between the short- and long-run effects of the shocks. Different shocks generate different degrees of ‘unemployment persistence’ (responses to temporary shocks) and ‘unemployment responsiveness’ (responses to permanent shocks). We find that the growth drivers play a dominant role in accounting for the main swings in EU unemployment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CEPR Discussion Paper Series ; No. 4243

Classification and Topics

• Classification: Wirtschaft ; Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications ; Mobility, Unemployment, Vacancies, and Immigrant Workers: General ; Unemployment: Models, Duration, Incidence, and Job Search ; Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
• Subject: Arbeitslosigkeit ; Hysteresis ; Schock ; Arbeitsmarktflexibilisierung ; Internationaler Wettbewerb ; Konjunktur ; Schätzung ; EU-Staaten

Contributors, Location and Time

• Event: Geistige Schöpfung
• (who): Karanassou, Marika ; Sala, Héctor ; Snower, Dennis J.
• Event: Veröffentlichung
• (who): Centre for Economic Policy Research (CEPR)
• (where): London
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/3209
• Last update: 20.09.2024, 8:21 AM CEST