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http://hdl.handle.net/10419/3209
  
Title:Unemployment in the EU: Institutions, prices and growth PDF Logo
Authors:Karanassou, Marika
Sala, Héctor
Snower, Dennis J.
Issue Date:2004
Series/Report no.:CEPR Discussion Paper Series, Centre for Economic Policy Research (CEPR), London 4243
Abstract: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.
JEL:E30
E37
J60
J64
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW

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