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Unemployment in the euro area and unconventional monetary policy surprises

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  • Hülsewig, Oliver
  • Rottmann, Horst

Abstract

We examine the impact of the European Central Bank’s monetary policy on the euro area labor markets over the period 2010–2018. Using Jordà (2005) local projection method, we find that unemployment rates decline in response to expansionary monetary policy surprises that can be related to unconventional policy measures. At the same time, hours worked rise. In peripheral countries, the decrease in unemployment rates is relatively pronounced, while in core countries it is only minor. This result can be attributed to the effect of unconventional monetary policy, which was stronger in the periphery, and to the implementation of labor market liberalization reforms.

Suggested Citation

  • Hülsewig, Oliver & Rottmann, Horst, 2023. "Unemployment in the euro area and unconventional monetary policy surprises," Economics Letters, Elsevier, vol. 226(C).
    • Handle: RePEc:eee:ecolet:v:226:y:2023:i:c:s0165176523001222
    DOI: 10.1016/j.econlet.2023.111097
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    References listed on IDEAS

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    More about this item

    Keywords

    Euro area; Unconventional monetary policy; Labor markets; Local projections;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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