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The ins and outs of European unemployment

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  • Petrongolo, Barbara
  • Pissarides, Christopher

Abstract

In this paper we study the contribution of inflows and outflows to the dynamics of unemployment in three European countries, the United Kingdom, France and Spain. We compare performance in these three countries making use of both administrative and labor force survey data. We find that the impact of the 1980s reforms in Britain is evident in the contributions of the inflow and outflow rates. The inflow rate became a bigger contributor after the mid 1980s, although its significance subsided again in the late 1990s and 2000s. In France the dynamics of unemployment are driven virtually entirely by the outflow rate, which is consistent with a regime with strict employment protection legislation. In Spain, however, both rates contribute significantly to the dynamics, very likely as a consequence of the prominence of fixed-term contracts since the late 1980s.

Suggested Citation

  • Petrongolo, Barbara & Pissarides, Christopher, 2008. "The ins and outs of European unemployment," LSE Research Online Documents on Economics 3658, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:3658
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    References listed on IDEAS

    as
    1. Gomes, Pedro, 2012. "Labour market flows: Facts from the United Kingdom," Labour Economics, Elsevier, vol. 19(2), pages 165-175.
    2. Mirko Draca & Stephen Machin & Robert Witt, 2011. "Panic on the Streets of London: Police, Crime, and the July 2005 Terror Attacks," American Economic Review, American Economic Association, vol. 101(5), pages 2157-2181, August.
    3. Gary Solon & Ryan Michaels & Michael W. L. Elsby, 2009. "The Ins and Outs of Cyclical Unemployment," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 84-110, January.
    4. Yashiv, Eran, 2006. "U.S. Labor Market Dynamics Revisited," IZA Discussion Papers 2455, Institute of Labor Economics (IZA).
    5. Ramey, Garey & Shigeru Fujita, 2006. "The Cyclicality of Job Loss and Hiring," University of California at San Diego, Economics Working Paper Series qt4nz8p839, Department of Economics, UC San Diego.
    6. Shigeru Fujita & Garey Ramey, 2009. "The Cyclicality Of Separation And Job Finding Rates," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(2), pages 415-430, May.
    7. Shigeru Fujita & Garey Ramey, 2007. "Reassessing the Shimer facts," Working Papers 07-2, Federal Reserve Bank of Philadelphia.
    8. Robert Shimer, 2012. "Reassessing the Ins and Outs of Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 127-148, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    [1] Allard; Gayle. 2005. “Measuring Job Security Over Time: In Search of a Historical Indicator”; Instituto de Empressa Working Paper WP-05. (Available from http://www.ie.edu/eng/claustro/claustro_working_papers.asp?ano=2005&tipo=1) [2] Elsby; Michael; Ryan Michaels and Gary Solon. 2007. “The Ins and Outs of Cyclical Unemployment”; mimeo; University of Michigan. [3] Fujita; Shigeru and Garey Ramey. 2007. “The Cyclicality of Separation and Job Finding Rates”; Working Paper no. 07-19; Federal Reserve Bank of Philadelphia. Forthcoming in the International Economic Review. [4] Gomes; Pedro. 2007. “Labour Market Flows in the United Kingdom”; Discussion Paper; Bank of England; forthcoming. [5] Pissarides; Christopher A. 1986. “Unemployment and Vacancies in Britain”; Economic Policy vol. 3; 499-559. [6] Shimer; Robert. 2007. “Reassessing the Ins and Outs of Unemployment”; University of Chicago. [7] Yashiv; Eran. 2006. “US Labor Market Dynamics Revisited”; IZA Discussion Paper no. 2445; IZA; Bonn.;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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