[Publisher:] Institut für Weltwirtschaft (IfW) [Place:] Kiel [Year:] 1992
Kiel Working Paper 505
This paper is no more than a critical note on the mismatch philosophy. Its main point is that, under empirically acceptable assumptions, all measures developed so far - and probably all measures likely to emerge from refining the mismatch tools - are bound to seriously underestimate the extent of structural unemployment by any reasonable standard. For all that matters empirically, no period with a high share of mismatch in total unemployment is ever likely to emerge. Hence, if structural means mismatch, economists might as well stop worrying about structural labour market issues altogether. Of course, this unpleasant consequence raises the question whether the mismatch philosophy really captures the essence of what structural imbalances ought to mean. To answer this question, we shall set out an alternative framework which conforms more to what the term 'structural unemployment' actually denotes in the policy debate.