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On the Significance of Labor Reallocation for European Unemployment: Evidence from a Panel of 15 Countries

Listed author(s):
  • Dimitrios Bakas

    ()

    (Nottingham Business School, Nottingham Trent University, UK; The Rimini Centre for Economic Analysis, Italy)

  • Theodore Panagiotidis

    ()

    (Department of Economics, University of Macedonia, Greece; The Rimini Centre for Economic Analysis, Italy)

  • Gianluigi Pelloni

    ()

    (Department of Economics, University of Bologna, Italy; Wilfrid Laurier University, Canada; Johns Hopkins University, SAIS Bologna Center, Italy; The Rimini Centre for Economic Analysis, Italy)

We explore the macroeconomic effects of sectoral shifts for a set of 15 European countries. An extensive panel is constructed that allows us to assess the effect of labor reallocation in the European context. Indexes of labor market turbulence based on alternative sectoral disaggregation are constructed. The effect of labor reallocation on unemployment is found to be positive and significant in all different specifications. This remains robust when we consider measures of volatility in the model.

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File URL: http://www.rcea.org/RePEc/pdf/wp16-01.pdf
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Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 16-01.

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Date of creation: Jan 2016
Handle: RePEc:rim:rimwps:16-01
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  5. Mills, Terence C & Pelloni, Gianluigi & Zervoyianni, Athina, 1995. "Unemployment Fluctuations in the United States: Further Tests of the Sectoral-Shifts Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 294-304, May.
  6. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
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  8. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  9. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
  10. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2016. "Measuring Economic Policy Uncertainty," The Quarterly Journal of Economics, Oxford University Press, vol. 131(4), pages 1593-1636.
  11. Alain de Serres & Stefano Scarpetta & Christine de la Maisonneuve, 2002. "Sectoral Shifts in Europe and the United States: How They Affect Aggregate Labour Shares and the Properties of Wage Equations," OECD Economics Department Working Papers 326, OECD Publishing.
  12. De Grauwe, Paul, 2016. "The legacy of the Eurozone crisis and how to overcome it," Journal of Empirical Finance, Elsevier, vol. 39(PB), pages 147-155.
  13. Dimitrios Bakas & Theodore Panagiotidis & Gianluigi Pelloni, 2013. "Labor Reallocation: Panel Evidence from U.S. States," Working Paper Series 26_13, The Rimini Centre for Economic Analysis.
  14. Vasilis Sarafidis & Tom Wansbeek, 2012. "Cross-Sectional Dependence in Panel Data Analysis," Econometric Reviews, Taylor & Francis Journals, vol. 31(5), pages 483-531, September.
  15. Chudik, Alexander & Pesaran, M. Hashem, 2015. "Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors," Journal of Econometrics, Elsevier, vol. 188(2), pages 393-420.
  16. Parker, Jeffrey, 1992. "Structural Unemployment in the United States: The Effects of Interindustry and Interregional Dispersion," Economic Inquiry, Western Economic Association International, vol. 30(1), pages 101-116, January.
  17. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, 07.
  18. Hogrefe, Jan & Sachs, Andreas, 2014. "Unemployment and labor reallocation in Europe," ZEW Discussion Papers 14-083, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  19. Choi, Sangyup & Loungani, Prakash, 2015. "Uncertainty and unemployment: The effects of aggregate and sectoral channels," Journal of Macroeconomics, Elsevier, vol. 46(C), pages 344-358.
  20. Lilien, David M, 1982. "Sectoral Shifts and Cyclical Unemployment," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 777-793, August.
  21. Tony Caporale & K. Doroodian & M. R. M. Abeyratne, 1996. "Cyclical unemployment: sectoral shifts or aggregate disturbances? A vector autoregression approach," Applied Economics Letters, Taylor & Francis Journals, vol. 3(2), pages 127-130.
  22. Mai Dao & Davide Furceri & Prakash Loungani, 2014. "Regional Labor Market Adjustments in the United States," IMF Working Papers 14/211, International Monetary Fund.
  23. Eberhardt, Markus & Bond, Stephen, 2009. "Cross-section dependence in nonstationary panel models: a novel estimator," MPRA Paper 17692, University Library of Munich, Germany.
  24. Smets, Frank & Beyer, Robert C. M., 2015. "Labour market adjustments in Europe and the US: How different?," Working Paper Series 1767, European Central Bank.
  25. Mai Dao & Davide Furceri & Prakash Loungani, 2014. "Regional Labor Market Adjustments in the United States and Europe," IMF Working Papers 14/26, International Monetary Fund.
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