Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/152792 
Authors: 
Year of Publication: 
2004
Series/Report no.: 
ECB Working Paper No. 358
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
The paper examines whether the pattern of growth in euro area employment seen in the period 1997-2001 differed from that recorded in the past and what could be the reasons for that. First, a standard employment equation is estimated for the euro area as a whole. This shows that the lagged impact of both output growth and real labour cost growth, together with a productivity trend and employment “inertia”, can account for most of the employment developments between 1970 and the early 1990s. Conversely, these traditional determinants can only explain part of the employment development seen in recent years (1997-2001). Second, the paper shows sound evidence of a structural break in the aggregate employment equation in the late 1990s. Third, the paper provides some tentative explanations for this change in aggregate employment developments, using in particular country panels of institutional variables and of active labour market policies but also cross-sectional analyses. Among the relevant factors likely to have contributed to rising aggregate employment in recent years are changes in the sectoral composition of euro area employment, the strong development of part-time jobs, lower labour tax rates and possibly less stringent employment protection legislation and greater subsidies to private employment.
Subjects: 
Active labour market policies
Aggregate employment
Demand for labour
euro area
Labour market institutions
JEL: 
C2
E24
H50
J23
Document Type: 
Working Paper

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