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The Global Economic Crisis: Long-Term Unemployment in the OECD


  • Junankar, Pramod N. (Raja)

    () (University of New South Wales)


This paper analyses the impact of the global economic crisis on unemployment and long term unemployment in the OECD. It uses simple econometric models using panel data (quarterly) and time series data. In general, we find that long term unemployment increases with the unemployment rate, there is persistence in long term unemployment, and that the employment protection variable and the replacement rate are statistically insignificant. Overall, the findings of our research are that there are many differences between the impact of the Great Recession on different countries. Countries that faced a significant financial crisis and a collapse of the housing market bubble have had large increases in unemployment and long term unemployment. There was a big fall in employment in the (especially) construction and manufacturing industries. The financial collapse led to an increase in unemployment in the financial and business sector. As a result of these twin shocks labour mobility of the unemployed is likely to be affected: with negative equity in housing, unemployed workers are unlikely to move regionally. With a loss of wealth (in housing and financial assets, including superannuation) there will be a fall in consumer spending which will slow down the recovery of economies. This means that, especially for some countries, there will be a long period of high unemployment and long term unemployment.

Suggested Citation

  • Junankar, Pramod N. (Raja), 2011. "The Global Economic Crisis: Long-Term Unemployment in the OECD," IZA Discussion Papers 6057, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6057

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    References listed on IDEAS

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    Cited by:

    1. Spermann, Alexander, 2014. "Zehn Jahre Hartz IV – Was hilft Langzeitarbeitslosen wirklich?," IZA Standpunkte 76, Institute for the Study of Labor (IZA).
    2. Geoff C. Harcourt & Peter Kriesler & John Nevilet, 2013. "Why myths in neoclassical economics threaten the world economy: a post-Keynesian Manifesto," Discussion Papers 2013-36, School of Economics, The University of New South Wales.
    3. Wozniak, Marcin, 2016. "Job placement agencies in an artificial labor market," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 10, pages 1-54.
    4. Mirajul Haq & Karim Khan & Ayesha Parveen, 2014. "The Growth and Employment Impacts of the 2008 Global Financial Crisis on Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(2), pages 129-154, July-Dec.

    More about this item


    long-term unemployment; global crisis; labour market policies; OECD;

    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
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J69 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Other

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