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EU unemployment is a problem. | 70 comments (70 topical, editorial, 0 hidden)
Re: EU unemployment is a problem. (none / 1)
The Blanchard document puts it down to the oil shocks combined with some other shocks: that's his pet theory. The idea, if I understand it properly from my skimming, is that the institutions were set-up for one world then the world changed and the institutions didn't adapt.

The key thing is that we don't really know what causes high unemployment. You can't really blame labour law except in combination with other factors, not all of which have been identified.

by Colman (colman at eurotrib.com) on Tue Mar 28th, 2006 at 10:21:12 AM EST
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Re: EU unemployment is a problem. (4.00 / 2)
It probably is important to examine participation rates. Instinctively I would assume that there are more people staying in the working arena around 65 than in the 60's (but I might be wrong about that.) I'd equally suspect that the number of women participating in the workforce has changed as well.
by Metatone (metatone [a|t] gmail (dot) com) on Tue Mar 28th, 2006 at 10:27:03 AM EST
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Re: EU unemployment is a problem. (4.00 / 2)
Absolutely. I'm trying to get into the literature on this, at least superficially. I have a sense that you really need to look at a group of statistics rather than just one.

I'd nominate:

  1. Standard Unemployment rate. It's not a great measure but it's a start.
  2. Unemployment rate  + discouraged workers + underutilised workers (US BLS U-6) rate. This tells you something about the quality of the jobs as well as the
  3. Labour participation rate. Changes in this have to be related to the other measures. This can go down because people give up or because people don't need to work.
  4. Real wage levels: if unemployment seems low and real wage levels aren't rising something is probably wrong.
  5. Some mix of productivity rates and hours worked.
by Colman (colman at eurotrib.com) on Tue Mar 28th, 2006 at 10:33:28 AM EST
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Re: EU unemployment is a problem. (none / 0)
Yes, the oil shocks certainly coincides in time with the unemployment rise in most of western Europe.

In Sweden we had almost full employment and high inflation until 1990. Then we switched to low inflation high unemployment. This can of course be taken as an argument for that inverse relationship between inflation and unemployment theory (someone or another s curve), but my guess is other conclusions can also be drawn. However in the early 90ies in Sweden there was much talk about NAIRU - non-accelerating inflation rate of unemployment - suggesting that the rates were set to keep inflation down and thus unemployment up.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Mar 28th, 2006 at 10:51:43 AM EST
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EU unemployment is a problem. | 70 comments (70 topical, 0 editorial, 0 hidden)
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