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Demographic and education effects on unemployment in Europe

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  • Biagi, Federico
  • Lucifora, Claudio

Abstract

We analyse the effects of demographic and education changes on unemployment rates in Europe. Using a panel of European countries for the 1975-2002 period - disaggregated by cohort and education - we empirically test the economic effects of the "baby bust" and the "education boom". We find that structural shifts in the population age structure play an important role and that a significant share of variation in unemployment rates is also attributable to educational changes, the latter being usually neglected in aggregate studies. Results show that demographic and education shocks are qualitatively different for young (adult) workers as well as for more (less) educated people. Changes in the population age structure are positively related to the unemployment rate of young workers, while have no effect on adults. Conversely, changes in the education structure show a negative effect on the unemployment of the more educated. Labour market institutions also influence unemployment rates in different ways. Employment protection for regular workers increases unemployment rates, while temporary employment provisions reduce it. Unemployment benefits are found to have a displacement effect on unemployment, while corporatism of wage bargaining improves employment performance.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 15 (2008)
Issue (Month): 5 (October)
Pages: 1076-1101

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Handle: RePEc:eee:labeco:v:15:y:2008:i:5:p:1076-1101

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Unemployment Demographic Education Labour market institutions;

References

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  1. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, 01.
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  7. Acemoglu, Daron & Aghion, Philippe & Violante, Giovanni L, 2001. "Deunionization, Technical Change and Inequality," CEPR Discussion Papers 2764, C.E.P.R. Discussion Papers.
  8. Andrea Bassanini & Romain Duval, 2006. "Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions," OECD Social, Employment and Migration Working Papers 35, OECD Publishing.
  9. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain The Rising Return To College For Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 705-746, May.
  10. Nickell, Stephen & Bell, Brian, 1996. "Changes in the Distribution of Wages and Unemployment in OECD Countries," American Economic Review, American Economic Association, vol. 86(2), pages 302-08, May.
  11. Finis Welch, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," UCLA Economics Working Papers 146, UCLA Department of Economics.
  12. Nickell, S. & Layard, R., 1997. "Labour Market Institutions and Economic Performance," Papers 23, Centre for Economic Performance & Institute of Economics.
  13. Nordström Skans, Oskar, 2002. "Age effects in Swedish local labour markets," Working Paper Series 2002:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  14. Wright, Robert E, 1991. "Cohort Size and Earnings in Great Britain," Journal of Population Economics, Springer, vol. 4(4), pages 295-305, November.
  15. Welch, Finis, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S65-97, October.
  16. Zimmermann, Klaus F, 1991. "Ageing and the Labor Market: Age Structure, Cohort Size and Unemployment," Journal of Population Economics, Springer, vol. 4(3), pages 177-200, August.
  17. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
  18. Glenda Quintini & Sébastien Martin, 2006. "Starting Well or Losing their Way?: The Position of Youth in the Labour Market in OECD Countries," OECD Social, Employment and Migration Working Papers 39, OECD Publishing.
  19. Stapleton, David C & Young, Douglas J, 1988. "Educational Attainment and Cohort Size," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 330-61, July.
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Citations

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Cited by:
  1. Gina Cristina Dimian & Bogdan Ileanu & Josef Jablonský & Jan Fábry, 2013. "Analysis of European Labour Market in the Crisis Context," Prague Economic Papers, University of Economics, Prague, vol. 2013(1), pages 50-71.
  2. Bassanini, Andrea & Nunziata, Luca & Venn, Danielle, 2008. "Job Protection Legislation and Productivity Growth in OECD Countries," IZA Discussion Papers 3555, Institute for the Study of Labor (IZA).
  3. Andrea Bassanini, 2011. "Aggregate Earnings and Macroeconomic Shocks: The Role of Labour Market Policies and Institutions," OECD Social, Employment and Migration Working Papers 123, OECD Publishing.
  4. Andrea Bassanini & Romain Duval, 2009. "Unemployment, institutions, and reform complementarities: re-assessing the aggregate evidence for OECD countries," Oxford Review of Economic Policy, Oxford University Press, vol. 25(1), pages 40-59, Spring.
  5. Agnieszka Sitko-Lutek & Aneta Karasek, 2013. "Innovations in Higher Education System," Diversity, Technology, and Innovation for Operational Competitiveness: Proceedings of the 2013 International Conference on Technology Innovation and Industrial Management, ToKnowPress.
  6. Ernesto Friedrich de Lima Amaral & Joseph E. Potter & Daniel Hamermesh & Eduardo Rios-Neto, 2013. "Age, education, and earnings in the course of Brazilian development: Does composition matter?," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 28(20), pages 581-612, March.

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