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Demographic and Education Effects on Unemployment in Europe: Economic Factors and Labour Market Institutions

Author

Listed:
  • Biagi, Federico

    (University of Padova)

  • Lucifora, Claudio

    (Università Cattolica del Sacro Cuore)

Abstract

We analyse the effects of demographic and education changes on unemployment rates in Europe. Using a panel of European countries for the 1980-2000 period - disaggregated by cohort, gender and education -, we empirically test the economic effects of two stylised facts that have occurred in recent decades: the "baby bust" and the "education boom". We find that structural shifts in the population age structure play an important role and that a lot of variation is also attributable to educational changes, the latter usually neglected in aggregate studies. Results show that demographic and education shocks are qualitatively different for young (adult) workers as well as for more (less) educated people. While adult workers and more educated individuals, in general, experience lower unemployment rates, changes in the population age structure appear to be positively related to young workers' unemployment rates while they have no effect on adults. Conversely changes in the skill structure ("education boom"), even when controlling for skill-biased technological change, reduce the unemployment of the more educated. Labour market institutions also influence unemployment rates in different ways. Unemployment benefits are found to have a positive impact on unemployment, while bargaining coordination and employment protection reduce it.

Suggested Citation

  • Biagi, Federico & Lucifora, Claudio, 2005. "Demographic and Education Effects on Unemployment in Europe: Economic Factors and Labour Market Institutions," IZA Discussion Papers 1806, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp1806
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    References listed on IDEAS

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    1. Daron Acemoglu, 2003. "Cross-Country Inequality Trends," Economic Journal, Royal Economic Society, vol. 113(485), pages 121-149, February.
    2. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 705-746.
    3. Giuseppe Bertola & Francine Blau & Lawrence Kahn, 2007. "Labor market institutions and demographic employment patterns," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(4), pages 833-867, October.
    4. Bertola, Giuseppe & Blau, Francine D & Kahn, Lawrence, 2001. "Comparative Analysis of Labour Market Outcomes: Lessons for the US from International Long-Run Evidence," CEPR Discussion Papers 3023, C.E.P.R. Discussion Papers.
    5. Brunello, Giorgio & Lauer, Charlotte, 2004. "Are Wages in Southern Europe More Flexible? The Effects of Cohort Size on European Earnings," IZA Discussion Papers 1299, Institute of Labor Economics (IZA).
    6. Acemoglu, Daron & Aghion, Philippe & Violante, Giovanni L., 2001. "Deunionization, technical change and inequality," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 229-264, December.
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    Citations

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    Cited by:

    1. Jimeno, Juan F. & Lamo, Ana & Christopoulou, Rebekka, 2010. "Changes in the wage structure in EU countries," Working Paper Series 1199, European Central Bank.
    2. Dario Sciulli & Marcello Signorelli, 2010. "University-to-work transitions: the case of Perugia," Quaderni del Dipartimento di Economia, Finanza e Statistica 77/2010, Università di Perugia, Dipartimento Economia.
    3. Guido Schwerdt & Jarkko Turunen, 2007. "Changes in Human Capital: Implications for Productivity Growth in the Euro Area," ifo Working Paper Series 53, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    4. Torge Middendorf, 2008. "Returns to Education in Europe – Detailed Results from a Harmonized Survey," Ruhr Economic Papers 0065, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Middendorf, Torge, 2008. "Returns to Education in Europe – Detailed Results from a Harmonized Survey," Ruhr Economic Papers 65, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Elena-Doina Dascalu & Andreea Mirica & Ioan Mincu-Radulescu, 2016. "Pursuing Higher Education: Privileged or Free Access in Romania?," Romanian Statistical Review, Romanian Statistical Review, vol. 64(3), pages 3-18, September.
    7. Guido Schwerdt & Jarkko Turunen, 2007. "Growth In Euro Area Labor Quality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(4), pages 716-734, December.
    8. repec:zbw:rwirep:0065 is not listed on IDEAS

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    More about this item

    Keywords

    demographic; unemployment; labour market institutions; education;
    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
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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