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Structural Unemployment in Finland

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  • Pasi Holm
  • Helina Somervouri

Abstract

Since the Finnish unemployment rate has rocketed to a very high level in the beginning of the 1990's, it is worth to study to what extent the unemployment rate prevailing today is due to cyclical or to structural reasons. In this paper we try to estimate two different indicators that represent the structural part of unemployment, the NAWRU and the NAIRU. The NAWRU (non-accelerating wage rate of unemployment) measures the structural unemployment simply by relating unemployment to wage inflation. The NAIRU (non-accelerating inflation rate of unemployment) in this paper is based on structural estimates of the price setting behaviour of firms and the wage setting behaviour of trade unions. The estimated NAWRU follows very closely the actual unemployment in Finland indicating that it is not the proper measure for the structural unemployment. The estimated NAIRU were at a low level up to the end of the eighties. Since then both the actual unemployment rate and the NAIRU have rocketed. In ... Le taux de chômage finlandais s’étant rapidement accru à un niveau très élevé au début des années 90, il est intéressant d’analyser dans quelle mesure le niveau du chômage enregistré aujourd’hui résulte de facteurs cycliques ou structurels. Dans cet article, nous tentons d’estimer deux indicateurs différents représentant la part structurelle du chômage, le NAWRU et le NAIRU. Le NAWRU (le taux de chômage non accélérateur du taux de salaire) mesure le chômage structurel en reliant simplement le chômage à l’inflation salariale. Le NAIRU (le taux de chômage non accélérateur d’inflation) est défini dans cet article à partir de l’estimation structurelle des comportements de fixation de prix des entreprises et de fixation de salaire des syndicats. Le NAWRU estimé suit très étroitement le taux de chômage effectif en Finlande, ce qui suggère qu’il ne constitue pas une mesure adéquate du chômage structurel. Le NAIRU estimé se situait à un faible niveau jusqu’à la fin des années 80. Depuis ...

Suggested Citation

  • Pasi Holm & Helina Somervouri, 1997. "Structural Unemployment in Finland," OECD Economics Department Working Papers 177, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:177-en
    DOI: 10.1787/378343303078
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    Cited by:

    1. Beissinger, Thomas, 2003. "Strukturelle Arbeitslosigkeit in Europa : eine Bestandsaufnahme (Structural unemployment in Europe * an inventory)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 36(4), pages 411-427.
    2. Fregert, Klas & Pehkonen, Jaakko, 2008. "Causes of structural unemployment in Finland and Sweden 1990-2004," Working Papers 2008:14, Lund University, Department of Economics.
    3. Beissinger, Thomas, 2003. "Strukturelle Arbeitslosigkeit in Europa : eine Bestandsaufnahme (Structural unemployment in Europe * an inventory)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 36(4), pages 411-427.
    4. Chiarini, Bruno & Piselli, Paolo, 2001. "Identification and dimension of the NAIRU," Economic Modelling, Elsevier, vol. 18(4), pages 585-611, December.
    5. Jakob B. Madsen, 2005. "Empirical Estimates of the NAIRU," LABOUR, CEIS, vol. 19(3), pages 563-593, September.
    6. Sinko, Pekka & Holm, Pasi & Tossavainen, Pekka, 1999. "Labour Market Policy and Unemployment - A Job Flow Model of Finland," Discussion Papers 210, VATT Institute for Economic Research.
    7. Beissinger, Thomas, 2003. "Strukturelle Arbeitslosigkeit in Europa: Eine Bestandsaufnahme," University of Regensburg Working Papers in Business, Economics and Management Information Systems 389, University of Regensburg, Department of Economics.

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