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Augmented okun's law within the emu: working-time or employment adjustment? a structural equation model

Author

Listed:
  • Hélène Syed Zwick

    (University of Lille1, LEM (CNRS-UMR 9221), France & Confrontations Europe, bd Saint Germain, Paris)

  • S. Ali Shah Syed

    (School of Business, American University in Cairo)

Abstract

This paper examines the output-unemployment-working-time nexus within the European Monetary Union (EMU) with a dedicated focus on the impact of the Great Recession (2007-2013). Using recursive structural equation model (R-SEM) for the first time on this topic, we estimate an augmented Okun's law equation that includes the number of worked hours. The results confirm the existence of a significant and negative relation between output and unemployment and reveal a significant and positive relation between output gap and working-time. Three groups of countries according to the type of labour market response to an output variation have been identified. A first group characterized by a unilateral unemployment response, a second group characterized by a working-time response and a third group characterized by a complementary effect of both unemployment and working-time adjustment towards an output variation.

Suggested Citation

  • Hélène Syed Zwick & S. Ali Shah Syed, 2016. "Augmented okun's law within the emu: working-time or employment adjustment? a structural equation model," Economics Bulletin, AccessEcon, vol. 36(1), pages 440-448.
    • Handle: RePEc:ebl:ecbull:eb-15-00410
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    References listed on IDEAS

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    Cited by:

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    2. Vassilis Monastiriotis & Corrado Macchiarelli & Nikolitsa Lampropoulou, 2019. "Transition Dynamics in European Labour Markets During Crisis and Recovery," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(2), pages 213-234, June.

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    More about this item

    Keywords

    Okun's law; European Monetary Union; Structural Equation Model; Great Recession; working-time;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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