'Actual' versus 'virtual' employment in Europe Is Spain different?
We study the evolution of sectoral employment and labour cost in 11 European countries over the last two decades. Our statistical approach consists of decompositions for country, industry and temporal effects. Virtual economies are constructed by filtering country effects. We find that sectoral effects account for more than 80% of the long-run differentials across countries and industries in employment growth, whereas country-specific effects are more important in the analysis of labour-cost dynamics. The initial distribution of labour across sectors plays a crucial role in explaining cross-country differences in employment. We pay special attention to Spain, a country that has experienced a high persistent unemployment rate, and show that this may be the result of a severe sectoral reallocation problem, originating from the very heavy weight of agricultural employment in 1975. Our study of the virtual economies also provides new evidence about the relative performance of some industries and countries, e.g. the poor performance of Belgium, the relatively good performance of Italy, in particular its textile sector, etc.
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- Dale T. Mortensen & Christopher A. Pissarides, 1994.
"Job Creation and Job Destruction in the Theory of Unemployment,"
Review of Economic Studies,
Oxford University Press, vol. 61(3), pages 397-415.
- Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
- Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
- Alan C. Stockman, 1987.
"Sectoral and National Aggregate Disturbances to Industrial Output in Seven European Countries,"
NBER Working Papers
2313, National Bureau of Economic Research, Inc.
- Stockman, Alan C., 1988. "Sectoral and national aggregate disturbances to industrial output in seven European countries," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 387-409.
- Blanchard, Olivier & Jimeno, Juan F, 1995. "Structural Unemployment: Spain versus Portugal," American Economic Review, American Economic Association, vol. 85(2), pages 212-218, May.
- Costello, Donna M, 1993. "A Cross-Country, Cross-Industry Comparison of Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 207-222, April.
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