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Assessing the Impact of the Financial Crisis on Structural Unemployment in OECD Countries

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  • Stéphanie Guichard
  • Elena Rusticelli

Abstract

The global recession is likely to results in higher structural unemployment for some time in many OECD countries. This paper assesses how the shock to aggregate unemployment as a result of the economic crisis may be transmitted to structural unemployment through hysteresis effects that occur through the rise in long-term unemployment. The estimated increase in structural unemployment due to the crisis is estimated at ¾ percentage point in the OECD as a whole, but the paper highlights wide cross-country differences with the largest increases expected in those European countries where unemployment is increasing most and where institutional settings remain less favorable than elsewhere, notably Spain and Ireland. Évaluation de l'impact de la crise financière sur le chômage structurel dans les pays de l'OCDE La recession mondiale est susceptible d.entrainer un chomage structurel plus eleve pendant un certain temps dans de nombreux pays de l'OCDE. Ce document examine comment le choc sur le chomage global resultant de la crise economique peut etre transmis au chomage structurel par des effets d.hysteresis qui se produisent via la montee du chomage de longue duree. L'augmentation estimee de chomage structurel resultant de la crise est estimee a 3/4 de point de pourcentage pour l'OCDE dans son ensemble, mais cette etude souligne les differences importantes entre pays, avec notamment les plus grandes augmentations attendues dans les pays europeens ou l'environnement institutionnel demeure moins favorable qu'ailleurs, notamment l'Espagne et l'Irlande.

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 767.

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Date of creation: 14 Oct 2010
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Handle: RePEc:oec:ecoaaa:767-en

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Keywords: Phillips curve; NAIRU; institutions; unemployment; long-term unemployment; hysteresis; chômage de longue durée; hystérésis; chômage; institutions; courbe de Phillips; NAIRU;

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Cited by:
  1. Eric Heyer, 2010. "Efficacité de la politique économique et position dans le cycle: le cas de la défiscalisation des heures supplémentaires en France," Documents de Travail de l'OFCE, Observatoire Francais des Conjonctures Economiques (OFCE) 2010-26, Observatoire Francais des Conjonctures Economiques (OFCE).
  2. Andersen, Torben M. & Maibom Pedersen, Jonas & Svarer, Michael & Sørensen, Allan, 2013. "Do Business Cycles Have Long-Term Impact for Particular Cohorts?," IZA Discussion Papers 7817, Institute for the Study of Labor (IZA).
  3. Bjarni G. Einarsson & Jósef Sigurdsson, 2013. "How "Natural" is the Natural Rate? Unemployment Hysteresis in Iceland," Economics, Department of Economics, Central bank of Iceland wp64, Department of Economics, Central bank of Iceland.
  4. Crafts, Nicholas; Fearon, Peter, 2010. "Lessons from the 1930s' Great Depression," CAGE Online Working Paper Series, Competitive Advantage in the Global Economy (CAGE) 23, Competitive Advantage in the Global Economy (CAGE).
  5. Eric Heyer, 2011. "The effectiveness of economic policy and position in the cycle The case of tax reductions on overtime in France," Documents de Travail de l'OFCE, Observatoire Francais des Conjonctures Economiques (OFCE) 2011-09, Observatoire Francais des Conjonctures Economiques (OFCE).
  6. repec:spo:wpecon:info:hdl:2441/5l6uh8ogmqildh09h61ql8ubo is not listed on IDEAS
  7. Acocella Nicola & Bisio Laura & Di Bartolomeo Giovanni & Pelloni Alessandra, 2011. "Labor market imperfections, real wage rigidities and financial shocks," wp.comunite, Department of Communication, University of Teramo 0070, Department of Communication, University of Teramo.
  8. Jose Ignacio García Pérez & Victoria Osuna, 2011. "The effects of introducing a single open-ended contract in the Spanish labour market," Working Papers 11.07, Universidad Pablo de Olavide, Department of Economics.
  9. Igor Lebrun, 2011. "Working Paper 08-11 - What has been the damage of the financial crisis to Belgian GDP? An assessment based on the FPB’s medium-term outlook," Working Papers 1108, Federal Planning Bureau, Belgium.
  10. William R. White, 2010. "Commentary: after the fall," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, pages 61-75.
  11. Junankar, Pramod N. (Raja), 2011. "The Global Economic Crisis: Long-Term Unemployment in the OECD," IZA Discussion Papers 6057, Institute for the Study of Labor (IZA).
  12. Bernal-Verdugo, Lorenzo E. & Furceri, Davide & Guillaume, Dominique, 2013. "Banking crises, labor reforms, and unemployment," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1202-1219.

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