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Unemployment, capital accumulation and labour market institutions in the Great Recession

Listed author(s):
  • Engelbert Stockhammer

    (Kingston University, UK)

  • Alexander Guschanski

    (Kingston University, UK)

  • Karsten Köhler

    (Kingston University, UK)

This paper restates the post-Keynesian view of unemployment within a NAIRU framework. In the short run, the private effective labour demand need not be downward sloping because of debt deflation and wage-led demand regimes. In the medium run, the NAIRU will be endogenous because of the social norm character of wage setting and the supply-side effects of capital accumulation. Capital investment rather than labour market institutions is the crucial variable that explains changes in unemployment performance. We provide econometric evidence that the post-Keynesian view holds up well in the recession following the crisis of 2008.

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Article provided by Edward Elgar Publishing in its journal European Journal of Economics and Economic Policies: Intervention.

Volume (Year): 11 (2014)
Issue (Month): 2 (September)
Pages: 182-194

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Handle: RePEc:elg:ejeepi:v:11:y:2014:i:2:p182-194
Contact details of provider: Web page: http://www.elgaronline.com/ejeep

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