Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/90733
Authors: 
Nymoen, Ragnar
Sparrman, Victoria
Year of Publication: 
2012
Series/Report no.: 
Memorandum, Department of Economics, University of Oslo 20/2012
Abstract: 
We estimate the quantitative importance of labour market institutions for equilibrium unemployment in OECD. The empirical equation for unemployment is based on the solution of a dynamic macroeconomic model where wages and prices are jointly determined with unemployment. Compared to existing studies, the theoretical model implies a higher order dynamics in the nal equation for unemployment and the sample has more variation in unemployment and in institutions. Finally, we incorporate objectively and automatically selected indicators for structural breaks. We nd that institutional variables have statistical signi cance, but that these variables account for relatively little of the overall change in the OECD average unemployment rate. The shocks to the economy have been more important for the evolution in the actual average unemployment rate.
Subjects: 
OECD area unemployment
dynamics
structural breaks
equilibrium unemployment
wage setting
NAIRU
labour market institutions
automatic variable selection
JEL: 
C22
C23
C26
C51
E02
E11
E24
Document Type: 
Working Paper

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