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Employment and Asset Prices

  • Gylfi Zoega

A medium-term relationship exists between share prices, normalised by labour productivity, and the rate of unemployment in the OECD countries. A similar relationship appears to exist between unemployment and house prices. This helps explain decadal changes in mean unemployment, such as the shift to higher mean unemployment in the Continental European countries in the 1970s and 1980s that coincided with a fall in the level of share prices, as well as differences in mean unemployment between countries.

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Paper provided by Department of Economics, Central bank of Iceland in its series Economics with number wp46.

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Date of creation: Nov 2009
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Handle: RePEc:ice:wpaper:wp46
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  14. Smith, Ron P. & Zoega, Gylfi, 2008. "Global Factors, Unemployment Adjustment and the Natural Rate," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 2, pages 1-29.
  15. Laurence Ball & Robert Moffitt, 2001. "Productivity Growth and the Phillips Curve," NBER Working Papers 8421, National Bureau of Economic Research, Inc.
  16. Francine Lafontaine & Jagadeesh Sivadasan, 2009. "Do Labor Market Rigidities Have Microeconomic Effects? Evidence from within the Firm," American Economic Journal: Applied Economics, American Economic Association, vol. 1(2), pages 88-127, April.
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  18. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
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  32. Nickell, S. & Layard, R., 1997. "Labour Market Institutions and Economic Performance," Papers 23, Centre for Economic Performance & Institute of Economics.
  33. Edmund S. Phelps & Hian Teck Hoon & Gylfi Zoega, 2004. "The Structuralist Perspective on Real Exchange Rate, Share Price Level and Employment Path: What Room is Left for Money?," Working Papers 05-2004, Singapore Management University, School of Economics.
  34. Hoon, Hian Teck & Phelps, Edmund S, 1992. "Macroeconomic Shocks in a Dynamized Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 82(4), pages 889-900, September.
  35. Smith, Ron & Zoega, Gylfi, 2007. "Global unemployment shocks," Economics Letters, Elsevier, vol. 94(3), pages 433-438, March.
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