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What Drives the NAIRU? Evidence from a Panel of OECD Countries

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  • Christian Gianella
  • Isabell Koske
  • Elena Rusticelli
  • Olivier Chatal

Abstract

This paper analyses the determinants of structural unemployment rates in a two-stage approach. First, time-varying NAIRUs are estimated for a panel of OECD economies on the basis of Phillips curve equations using Kalman filter techniques. In a second stage, the estimated NAIRUs are regressed on selected policy and institutional variables. As predicted by theoretical wage-setting/price-setting models, the level of the tax wedge and the user cost of capital are found to be important drivers of structural unemployment. Consistent with earlier studies, the level of product market regulation, union density and the unemployment benefit replacement rate also play an important role in explaining changes in the NAIRU although there is considerable variation in estimates across countries. Nonetheless, the set of structural variables provides a reasonable explanation of NAIRU dynamics over the period 1978-2003, even though recent decreases are better explained than the earlier surge. Quels déterminants du NAIRU ? Évidence empirique à partir d'un panel de pays de l'OCDE Cette étude analyse les déterminants du taux de chômage structurel par une approche en deux étapes. Premièrement, des taux de chômage non inflationnistes (NAIRU) variables au cours du temps sont estimés sur la base de courbes de Phillips en utilisant les techniques de type filtre de Kalman. Dans une seconde étape, les NAIRUs estimés sont régressés sur une sélection de variables institutionnelles et de politique économique. Conformément aux prédictions théoriques de modèles de type WS PS «wage-setting/pricesetting », le niveau du coin fiscal et le coût d’usage du capital et apparaissent comme des déterminants-clés du chômage structurel. Conformément aux études précédentes, le niveau de réglementation sur le marché de biens, l’implantation syndicale et le taux de remplacement des allocations chômage jouent également un rôle important dans l’explication des variations du NAIRU bien qu'il y ait des différences considérables d’un pays á l’autre dans les résultats. Néanmoins, cet ensemble de variables structurelles s’avèrent avoir une capacité prédictive de la dynamique du NAIRU relativement élevée sur la période 1978-2003, même si la phase récente de reflux est mieux expliquée que la hausse préalable.

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 649.

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Date of creation: 10 Nov 2008
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Handle: RePEc:oec:ecoaaa:649-en

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Keywords: NAIRU; institutions; unemployment; user cost of capital; Phillips curve; policy reforms; institutions; coût d'usage du capital; réformes de politique économique; courbe de Phillips; chômage;

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  1. Finanzkrise, Arbeitsmärkte und PolitikstrategienVom Umgang mit der Unterbeschäftigung
    by Norbert Berthold in Wirtschaftliche Freiheit on 2009-10-25 00:01:13
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Cited by:
  1. Simon Sturn, 2011. "Labour market regimes and unemployment in OECD countries," IMK Working Paper 6-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  2. Hjelm, Göran & Jönsson, Kristian, 2010. "In Search of a Method for Measuring the Output Gap of the Swedish Economy," Working Paper 115, National Institute of Economic Research.
  3. Silvia Fedeli & Francesco Forte & Ottavio Ricchi, 2013. "The long term negative relation between public deficit and structural unemployment: An empirical study of OECD countries (1980-2009)," Working Papers 160, University of Rome La Sapienza, Department of Public Economics.
  4. Task Force of the Monetary Policy Committee of the European System of Central Banks, 2012. "Euro area labour markets and the crisis," Occasional Paper Series 138, European Central Bank.
  5. Lilas Demmou, 2012. "Matching Skills and Jobs in Estonia," OECD Economics Department Working Papers 1007, OECD Publishing.
  6. David Kiefer & Codrina Rada, 2013. "Profit maximizing goes global: the race to the bottom," Working Paper Series, Department of Economics, University of Utah 2013_05, University of Utah, Department of Economics.
  7. Bjarni G. Einarsson & Jósef Sigurdsson, 2013. "How "Natural" is the Natural Rate? Unemployment Hysteresis in Iceland," Economics wp64, Department of Economics, Central bank of Iceland.
  8. Horst Feldmann, 2012. "Product Market Regulation and Labor Market Performance around the World," LABOUR, CEIS, vol. 26(3), pages 369-391, 09.
  9. Simon STURN, 2013. "Are corporatist labour markets different? Labour market regimes and unemployment in OECD countries," International Labour Review, International Labour Organization, vol. 152(2), pages 237-254, 06.
  10. Marcel Garz & Artur Tarassow, . "Does an expanding low-pay sector decrease structural unemployment? Evidence from Germany," Macroeconomics and Finance Series 201104, Hamburg University, Department Wirtschaft und Politik.
  11. Giuseppe Bertola & John Driffill & Harold James & Hans-Werner Sinn & Jan-Egbert Sturm & Ákos Valentinyi, 2013. "Chapter 3: Labour Market Reform and Youth Unemployment," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 73-94, 02.
  12. Abdullah Bahce & Yusuf Karaaslan, 2009. "Effects Of Global Crisis On Structural Policies And Financial Regulations: The Comparison Of Oecd Economies," Perspectives of Innovation in Economics and Business (PIEB), Prague Development Center, vol. 3(3), pages 32-34.

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