The impact of the crises on European unemployment and the need for new policies (original) (raw)

Austerity policies in the Eurozone: How they affect youth unemployment?

The Central European Review of Economics and Management, 2019

Aim: Analyse the effects of stabilization policies on youth unemployment, using government deficit besides the use of fiscal policy by the supply side; aimed to characterize the economic framework conditions under which fiscal policy could reduce youth unemployment. Design/Research methods: We consider an economic framework featuring the use of monetary and fiscal rules within a monetary union. In this scenario, that should be representative of the Eurozone, we will analyse the effects of stabilization policies when dealing with a financial crisis which produces contractive effects on output and on employment. We will pay special attention to the conservativeness of the central bank, the degree of austerity of the fiscal authorities and the initial level of government debt. Those characteristics prove to be crucial for the sustainability of economic policies packages based on fiscal consolidation and the use of fiscal policy instruments by the supply side, when trying to deal with u...

The joint impact of labour policies and the “Great Recession” on unemployment in Europe

Economic Systems, 2014

The paper consists in an empirical analysis of the separate as well as joint impacts on total and youth unemployment of indicators of labour market policies, on the one hand, and the financial crisis associated with the "Great Recession", on the other. In particular, we investigate labour market data in the past two decades for the Enlarged Europe and we adopt a variable accounting for the idiosyncratic-severity shock of the crisis. This time-varying and country-specific crisis variable enables us to test empirically and in a novel way the joint impact of labour market policies and the economic crisis on labour market dynamics even when accounting for common macro shocks.

The Unbearable Divergence of Unemployment in Europe

SSRN Electronic Journal, 2015

Unemployment in Europe is not only "too high", it is also too different across countries that belong to a monetary union. In this paper we i) document this increasing heterogeneity, ii) try to explain it and iii) draw from our diagnosis indications as to the appropriate set of policies to reduce unemployment and labour market disparities. Our analysis suggests that the divergence in labour market outcomes across Europe is the by-product of interactions between, on the one hand, shocks of varying size and nature, and, on the other hand, country-specific labour market institutions. We argue that EU policy coordination and conditionality during the Great Recession and the euro area debt crisis did not properly take into account these interactions. We also propose a change in the European policy approach for fighting unemployment.

Austerity Policies in the Eurozone: What Can We Learn After the Crisis?

International Advances in Economic Research, 2019

In the Eurozone, the financial crisis effects have been hit countries in a different manner. Austerity policies have not been good for everyone and have caused inequality in some groups. Some countries of the periphery have showed more vulnerable, producing alarming figures on output decreases and unemployment increases, particularly those of young unemployment. This compromise the inter-generational aspects of sustainable growth and development. In this paper, we consider an economic framework featuring the use of monetary and fiscal rules within a monetary union. In this scenario, that should be representative of the Eurozone, we will analyse the effects of stabilization policies when dealing with a financial crisis having contractive effects on output. Using data provided by Eurostat, we will perform an empirical application for three sets of European countries: the core, the peripheral, and the Eastern countries. In our analysis, we will also differentiate countries according with their historical unemployment path. We will show the results of stabilization fiscal policies by the supply-side, in terms of output and young unemployment before the crisis, 2007, and ten years later, 2017. The exercises will be performed under different degrees of conservativeness of the central bank, austerity of the fiscal authorities and different levels of public debt. Our results could help us to stablish the conditions under which stabilization policies have would lead to a less inequality outcomes.

The labour market and unemployment in Europe 15

2015

JEL codes: C22, E24, F15 The current economic and financial crisis has had a negative effect all over the world. Nonetheless, this effect has not been the same one in all countries as some countries were more affected than others. This paper analyses the variations that the unemployment rate suffered in the countries that form the European Union 15. Apart from trying to explain how this rate fluctuates throughout a determined timeframe and observe if it converges back to its initial natural unemployment rate of if the so called hysteresis is produced.

High Unemployment in Europe: Diagnosis and Policy Implications

1986

Econometric evidence suggests that the non-accelerating inflation rate of unemployment (the NAIRU) has risen sharply in Europe in the past fifteen years. In the first section of this paper, I review the recent proliferation of supply-side models that say interesting things about why the NAIRU has increased so substantially in Europe. In the second section of the paper, I employ a simple example to show how aggregate demand should optimally be managed in response to transitory and permanent supply shocks, especially those shocks that cause a persistent rise in the NAIRU. Also, I discuss some policy implications of the increasingly popular "hysteresis" hypothesis, that the NAIRU itself is influenced by the time path of actual unemployment.

Unemployment in the European Union: a dynamic reappraisal

Economic Modelling, 2003

This paper examines the movements in EU unemployment from two perspectives: (a) the NRU/NAIRU perspective, in which unemployment movements are attributed largely to changes in the long-run equilibrium unemployment rate and (b) the chain-reaction perspective, in which unemployment movements are viewed as the outcome of the interplay between labor market shocks and prolonged lagged adjustment processes. We present an empirical analysis that distinguishes between unemployment movements arising from long-run equilibrium changes and those arising from lagged intertemporal adjustments. This analysis has far-reaching policy implications. Our analysis shows that the rise in EU unemployment over the 1970s and Þrst part of the 1980s was due largely to permanent shocks (especially the rise in working-age population and the decline in capital formation), whereas the unemployment increase in the Þrst part of the 1990s was due largely to temporary shocks (especially the fall in competitiveness and the rise in real interest rates).

The Rise of European Unemployment: A Synopsis

Unemployment in the European Union has risen from a modest 2% in 1970 to 8.3% in 2002, a level not seen since the Great Depression. In this draft introduction for his new book, The Rise of European Unemployment: A Keynesian Approach, economist Engelbert Stockhammer argues that changes in the relationship between the financial sector and the real sector of the economy, a phenomenon he labels “financialization,” is at the root of the slowdown.

Comparisons and Contrasts of the Impact of the Crisis on Euro Area Labour Markets

SSRN Electronic Journal, 2015

1 iNTRODUCTiON 2 LABOUR MARKET DYNAMiCS AND UNEMPLOYMENT OvER THE CRiSiS 2.1 Employment and unemployment developments 2.2 The concentration of employment losses 2.3 The rise in youth unemployment Box 1 The lump of labour fallacy: a reassesment for the euro area 2.4 Underemployment and discouraged workers Box 2 Spain: assessing the extent of underemployment and discouragement using labour flow data 2.5 Labour supply dynamics and unemployment over the crisis Box 3 Migration trends over the crisis 2.6 Analysis of labour market flows 3 EviDENCE OF STRUCTURAL LABOUR MARKET CHANgES OvER THE COURSE OF THE CRiSiS 3.1 The rise in long-term unemployment since the onset of the crisis 3.2 Estimates of structural unemployment Box 4 Labour market reforms before and during the crisis 3.3 Beveridge Curve developments 3.4 Evidence of skill mismatch 4 THE ADjUSTMENT OF wAgES DURiNg THE CRiSiS 4.1 A closer look at the evolution of wage indicators 4.2 Wage setting and unemployment elasticities Box 5 Real wage cyclicality in the euro area: disentangling composition from wage structure effects 5 CONCLUSiON APPENDix