The ins and outs of European unemployment
AbstractIn this paper we study the contribution of inflows and outflows to the dynamics of unemployment in three European countries, the United Kingdom, France and Spain. All countries are interesting in their own right and in the comparison with each other. Britain’s labour markets were strictly regulated up to the mid 1980s but they have been liberalized since then. France is still a regulated economy compared with Britain, with unemployment averaging about 8%. Spain has had the biggest rise in unemployment in Europe, reaching 24% in the mid 1990s, but policy reforms and fast growth since then brought it down to a level below France’s. We compare performance in these three countries making use of both administrative and labor force survey data. We find that the impact of the 1980s reforms in Britain is evident in the contributions of the inflow and outflow rates. The inflow rate became a bigger contributor after the mid 1980s, although its significance subsided again in the late 1990s and 2000s. In France the dynamics of unemployment are driven by the outflow rate virtually entirely, which is consistent with a regime with strict employment protection legislation. In Spain, however, both rates contribute significantly to the dynamics, perhaps as a consequence of the prominence of fixed-term contracts since the late 1980s.
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Bibliographic InfoPaper provided by London School of Economics and Political Science in its series Open Access publications from London School of Economics and Political Science with number http://eprints.lse.ac.uk/3607/.
Date of creation: May 2008
Date of revision:
Publication status: Published in American economic review (2008-05) v.98, p.256-262
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Web page: http://www.lse.ac.uk
Other versions of this item:
- Barbara Petrongolo & Christopher A. Pissarides, 2008. "The Ins and Outs of European Unemployment," CEP Discussion Papers dp0853, Centre for Economic Performance, LSE.
- Petrongolo, Barbara & Pissarides, Christopher A., 2008. "The Ins and Outs of European Unemployment," IZA Discussion Papers 3315, Institute for the Study of Labor (IZA).
- Petrongolo, Barbara & Pissarides, Christopher, 2008. "The Ins and Outs of European Unemployment," CEPR Discussion Papers 6681, C.E.P.R. Discussion Papers.
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
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