Unemployment in the European Union: Institutions, Prices, and Growth

Abstract

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Structural Shifts in Uk Unemployment 1979–2005: The Twin Impacts of Financial Deregulation and Computerization

“…The complex patterns revealed in the econometric analyses suggest that insights from Blanchard and Wolfers (2000) and Karanassou and Snower (1998) and Koranassou et al . (2004) about the dynamics of unemployment being affected by complex interactions between shocks and institutions rather than by the direct impact of specific shocks may well be correct.…”

“…Also, it is assumed in the labour market flexibility analyses that stable equilibria exist. But what will happen if these equilibria are never reached?Karanassou and Snower (1998) and Karanassou et al (2004) argue that the structural and cyclical components of unemployment are dependent upon one another because of a ‘chain reaction’ of unemployment effects. Equilibrium concepts of unemployment may have no relevance if a new equilibrium evolves before the economy has adjusted to an old equilibrium.…”

“…This empirical analysis focuses on identifying the sources of shocks to unemployment, whilst recognizing the Karanassou et al (2004) observation that single‐equation methods may overestimate the impact of shocks. So in identifying the factors that might contribute to these patterns, the theoretical ideas outlined in are tested empirically using a VECM specification to capture the interactions among computerization, financial deregulation and unemployment.…”

Institutions, capital stock and wage setting in Spain

“…For this to be checked, the following step is to conduct unit root tests of the variables involved in the analysis. 16 These tests lead to the conclusion that w t , g t , θ t and b t are I (1), whereas u t is I (0). Next stage is to test for the existence of cointegrating vectors among the set of non-stationary variables: that is, the existence of a stationary linear combination between w t , g t , b t and θ t .…”

“…An alternative to the institutionalist approach is the CRT: 3 it focuses on the importance of the lagged adjustment processes and outlines the central role of the growth drivers in explaining the unemployment trajectory. For example, Henry, Karanassou and Snower (2000) and Snower (2003 and2004) find capital stock to be a crucial determinant of unemployment in the UK and the EU. The empirical methodology of the CRT involves the estimation of multi-equation systems (with a wage setting equation always considered) and yields a salient result: the influence of the growth drivers is found to overcome the importance of wage pressure factors in To confront these two views, the Spanish wage setting curve is estimated to test: (i) to what extent the 'usual suspects' from the institutionalist view are relevant in a dynamic framework; and (ii) the relevance of a growth driver such as the ratio of public to private capital.…”