Unemployment in the OECD Since the 1960s. What Do We Know?

Nickell, Stephen; Nunziata, Luca; Ochel, Wolfgang

doi:10.1111/j.1468-0297.2004.00958.x

Cited by 845 publications

(831 citation statements)

References 45 publications

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“…However, the extent to which the employment (or the market production) loss can be interpreted as a welfare cost crucially depends on the home production value l. The standard calibration of the unemployment benefits for the US economy is between 0.3 and 0.6 (Kitao et al (2008), Nickell et al (2005) and Shimer (2005)). For the calibrated value of 0.97 for z, this implies that l is between 0.37 and 0.67, leading to a welfare cost equal to 0.30% and 0.14% respectively.…”

Section: A Flexible-wage Approachmentioning

confidence: 99%

Matching frictions, unemployment dynamics and the cost of business cycles

Hairault

Langot

Osotimehin

2010

Review of Economic Dynamics

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We investigate the welfare cost of business cycles implied by matching frictions. First, using the reduced-form of the matching model, we show that job finding rate fluctuations generate intrinsically a non-linear effect on unemployment: positive shocks reduce unemployment less than negative shocks increase it. For the observed process of the job finding rate in the US economy, this intrinsic asymmetry increases average unemployment, which leads to substantial business cycles costs. Moreover, the structural matching model embeds other non-linearities, which alter the average job finding rate and consequently the welfare cost of business cycles. Our theory suggests to subsidizing employment in order to dampen the impact of the job finding rate fluctuations on welfare.

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Section: A Flexible-wage Approachmentioning

confidence: 99%

Matching frictions, unemployment dynamics and the cost of business cycles

Hairault

Langot

Osotimehin

2010

Review of Economic Dynamics

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“…The findings indicate that institutional interactions are relevant for explaining unemployment in OECD countries. Similar empirical approaches, albeit with a different and limited sets of bivariate interactions, are chosen by Nickell et al (2005) and Baccaro and Rei (2007). Bassanini and Duval (2009) apply a more comprehensive approach.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The main goal of this paper is to provide an empirical basis for recommendations in terms of institutional adjustments. As pointed out by Nickell et al (2005) unemployment is probably exposed to some degree of endogenous persistence. This means that explanatory factors might have an influence on unemployment which lasts longer than one year.…”

Section: Empirical Model Specificationmentioning

confidence: 99%

“…The most prominent indicator in econometric studies has been the unemployment rate. Nickell and Layard (1999) argue that this is the best measure for labour market performance "because it is probably the least voluntary". The lower the unemployment rate the less persons are actively searching for a job and, consequently, the better the state of the labour market.…”

Section: Labour Market Performancementioning

confidence: 99%

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Labour Market Performance in OECD Countries: A Comprehensive Empirical Modelling Approach of Institutional Interdependencies

Sachs

Schleer

2013

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Non-technical SummaryThe recent economic crisis has resulted in a dramatic deterioration of economic growth and labour market performance in various industrialized countries. There is a widespread view that economies under pressure associated with high unemployment or low employment rates need to change their institutional environment. This needs to happen by conducting structural labour market reforms in order to improve labour market performance by, for instance, facilitating job reallocation processes or increasing labour market flexibility. Nevertheless, some authors argue that an institutional reform which is successful in one country might not be equally successful in another economy. A reform is assumed to depend on the country-specific institutional framework. Despite extensive theoretical and empirical contributions about the link between labour market institutions and labour market performance, evidence on the impact of changes of labour market rigidities on labour market performance which take the country-specific institutional framework and potential institutional interactions into account is still scarce.This paper contributes to the literature on interdependent institutional labour market effects by analyzing the impact of interdependencies between institutional factors for the evolution of unemployment. We follow the general theoretical model of Belot and van Ours (2004) in order to select institutional factors which are expected to have (interdependent) effects on the labour market. In order to model interactions in an econometrically correct way, we apply an innovative model selection approach to this literature, which is combined with a classical dynamic fixed-effect estimator for a two-way error component model. In doing so, we identify higher-order institutional interdependencies which matter for unemployment for a panel of 26 countries with annual data ranging from 2001 to 2008. In contrast to the previous literature, this paper is the first to focus on the impact of higher-order institutional interactions on unemployment and one of the first to consider a dynamic model specification in the context of institutional interactions. It thereby allows for a more precise and detailed analysis of the impact of interdependencies between different labour market institutions on labour market performance on a cross-country level.The results suggest that there are substantial qualitative and particularly quantitative differences across countries in the ...

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“…Clearly, there are other effects on wage setting; such as the promise of rising wage profiles intended to spur effort, which has been used to explain mandatory retirement (Lazear, 1979), as well as firms using tournaments to increase effort (Lazear and Rosen, 1981) or unions having preferences about the relative wages of different age groups. 2 See also Scarpetta (1996), Elmeskov, Martin and Scarpetta (1998), Nickell (1998), DiTella and MacCulloch (1998) and Nickell, Nunziata and Ochel (2005). unemployment equations for OECD countries for the period 1983-1993 for both the total unemployment rate as well as the youth unemployment rate, the long-term unemployment rate and the non-employment rate.…”

mentioning

confidence: 99%