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The Relationship between the Economic and Financial Crises and Unemployment Rate in the European Union -- How Institutions Affected Their Linkage

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  • Ionut Jianu

Abstract

This paper aims to estimate the impact of economic and financial crises on the unemployment rate in the European Union, taking also into consideration the institutional specificities, since unemployment was the main channel through which the economic and financial crisis influenced the social developments.. In this context, I performed two institutional clusters depending on their inclusive or extractive institutional features and, in each cases, I computed the crisis effect on unemployment rate over the 2003-2017 period. Both models were estimated by using Panel Estimated Generalized Least Squares method, and are weighted by Period SUR option in order to remove, in advance the possible inconveniences of the models. The institutions proved to be a relevant criterion that drives the impact of economic and financial crises on the unemployment rate, highlighting that countries with inclusive institutions are less vulnerable to economic shocks and are more resilient than countries with extractive institutions. The quality of institutions was also found to have a significant effect on the response of unemployment rate to the dynamic of its drivers.

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  • Ionut Jianu, 2020. "The Relationship between the Economic and Financial Crises and Unemployment Rate in the European Union -- How Institutions Affected Their Linkage," Papers 2007.12007, arXiv.org.
    • Handle: RePEc:arx:papers:2007.12007
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    References listed on IDEAS

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    1. Ionuţ JIANU, 2017. "The impact of private sector credit on income inequalities in European Union (15 member states)," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(611), S), pages 61-74, Summer.
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    4. Jianu, Ionuț, 2017. "The impact of private sector credit on income inequalities in European Union (15 member states)," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 0(2 (611)), pages 61-74.
    5. Lo Duca, Marco & Koban, Anne & Basten, Marisa & Bengtsson, Elias & Klaus, Benjamin & Kusmierczyk, Piotr & Lang, Jan Hannes & Detken, Carsten & Peltonen, Tuomas, 2017. "A new database for financial crises in European countries," ESRB Occasional Paper Series 13, European Systemic Risk Board.
    6. Ionut Jianu, 2020. "The impact of private sector credit on income inequalities in European Union (15 member states)," Papers 2007.11408, arXiv.org.
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    8. Misbah Tanveer Choudhry & Enrico Marelli & Marcello Signorelli, 2012. "Youth unemployment rate and impact of financial crises," International Journal of Manpower, Emerald Group Publishing Limited, vol. 33(1), pages 76-95, March.
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