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What Can Changes In Structural Factors Tell Us About Unemployment In Europe?

  • Julian Morgan
  • Annabelle Mourougane

This paper examines the impact of temporal variation in labour market institutions and other structural factors on unemployment in Europe. A system comprising a labour demand and a wage equation is estimated on pooled time-series data for the six largest EU countries for the 1980s and 1990s. The results suggest that changes in regional mismatch, trade union density and the ratio between consumer and producer prices are positively associated with structural unemployment. This result is robust to a wide variety of different specifications. No consistent role is found for other institutional factors (such as social security benefits, employment security and minimum wage). Copyright (c) Scottish Economic Society 2005.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.0036-9292.2005.00336.x
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Article provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.

Volume (Year): 52 (2005)
Issue (Month): 1 (02)
Pages: 75-104

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Handle: RePEc:bla:scotjp:v:52:y:2005:i:1:p:75-104
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  1. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
  2. Boozer, Michael A., 1997. "Econometric Analysis of Panel Data Badi H. Baltagi Wiley, 1995," Econometric Theory, Cambridge University Press, vol. 13(05), pages 747-754, October.
  3. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
  4. Booth, Alison L, 1996. "Firing Costs, Unions and Employment," CEPR Discussion Papers 1347, C.E.P.R. Discussion Papers.
  5. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
  6. Hofer, Helmut & Pichelmann, Karl, 1999. "Employment and Wage Adjustment in Euroland's Labour Market," Economics Series 76, Institute for Advanced Studies.
  7. Barrell, Ray & Pain, Nigel, 1999. "Trade restraints and Japanese direct investment flows," European Economic Review, Elsevier, vol. 43(1), pages 29-45, January.
  8. Manning, Alan, 1993. "Wage Bargaining and the Phillips Curve: The Identification and Specification of Aggregate Wage Equations," Economic Journal, Royal Economic Society, vol. 103(416), pages 98-118, January.
  9. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
  10. Bentolila, Samuel & Bertola, Giuseppe, 1990. "Firing Costs and Labour Demand: How Bad Is Eurosclerosis?," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 381-402, July.
  11. Lindbeck, Assar & Snower, Dennis J, 1986. "Wage Setting, Unemployment, and Insider-Outsider Relations," American Economic Review, American Economic Association, vol. 76(2), pages 235-39, May.
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