Falling real wages in the UK

David Blanchflower, Stephen Machin 12 May 2014

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There have been unprecedented falls in real wages in the UK since the start of the recession triggered by the financial crisis of 2008. This did not happen in previous economic downturns – median real wage growth slowed down or stalled, but it did not fall. Indeed, in past recessions, almost all workers in both the lowest and highest deciles of the wage distribution experienced growing real wages. It was the unemployed who experienced almost all the pain – they lost their jobs and much of their incomes, and many were unemployed for a long time.

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Topics:  Labour markets Poverty and income inequality

Tags:  US, unemployment, wages, Inequality, UK, Great Recession, real wages

From sick man of Europe to economic superstar: Germany’s resurgence and the lessons for Europe

Christian Dustmann, Bernd Fitzenberger, Uta Schönberg, Alexandra Spitz-Oener 03 February 2014

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In the late 1990s and into the early 2000s, Germany was called ‘the sick man of Europe’ (Bertram 1997). Today, Germany is Europe’s economic superstar.

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Topics:  Labour markets

Tags:  unemployment, Hartz reforms

Labour markets reforms and unemployment: Estimating the effects of wage moderation in the Spanish economy

Miguel Cardoso, Rafael Doménech, Juan Ramón García, Camilo A. Ulloa 20 December 2013

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With its huge unemployment rate, if there is a country in need of assessment of labour markets reforms and wage moderation, it is Spain. In the third quarter of 2013 the unemployment rate reached 26% of the labour force, more than twice the Eurozone’s 12.1%. As shown in Figure 1, since the beginning of the crisis in the first quarter of 2008, Spain has lost 17.5% of its employment (22.8% in the private sector), while the average real wage increased 7.6% until the second quarter of 2012.

Figure 1 Employment and real wages in Spain, 2007-2013

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Topics:  Europe's nations and regions Global crisis Labour markets

Tags:  unemployment, reforms, labour-market flexibility

A penny spent is a penny earned (by someone else): Measuring GDP

S Borağan Aruoba, Francis X. Diebold, Jeremy J Nalewaik, Frank Schorfheide, Dongho Song 03 December 2013

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“A growing number of economists say that the government should shift its approach to measuring growth. The current system emphasises data on spending, but the bureau also collects data on income. In theory the two should match perfectly – a penny spent is a penny earned by someone else. But estimates of the two measures can diverge widely, particularly in the short term...”
[Binyamin Appelbaum, The New York Times, 16 August 2011]

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Topics:  Frontiers of economic research

Tags:  US, GDP, unemployment, data, measurement, national income accounting

Currency wars and the euro

Jens Nordvig 25 November 2013

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A new battle for the ECB to fight

Last year, the ECB entered an existential battle for the euro. By promising to do ‘whatever it takes’ to safeguard the euro, the ECB managed to calm sovereign debt markets and engineer a much-needed easing of overall credit conditions in the Eurozone.

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Topics:  EU institutions Exchange rates Monetary policy

Tags:  ECB, eurozone, euro, unemployment, Bundesbank, Currency wars

Can temporary in-work support help the long-term unemployed enter sustained work?

Richard Dorsett 21 November 2013

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There is growing awareness among policymakers that, in order to break the so-called ‘low pay, no pay’ cycle, labour market programmes must do more than just encourage job entry. To help the unemployed achieve long-term self-sufficiency, they must also support them in work. For a long-time, the UK and the US have provided in-work payments to low-paid workers via Working Tax Credit and Earned Income Tax Credit, respectively. These are available on an ongoing basis, and are intended to sharpen work incentives by increasing the rewards to employment.

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Topics:  Labour markets

Tags:  unemployment, incentives, low pay, tax credits, hysteresis

How much unemployment insurance do we need?

Rafael Lalive, Camille Landais, Josef Zweimüller 09 November 2013

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The global crisis that erupted in 2008 has put millions of workers out of a job. The US, for instance, experienced a dramatic increase in unemployment from around 4% to more than 10% during the Great Recession. Unemployment remained stubbornly high even when the economy began to recover.

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Topics:  Global crisis Labour markets

Tags:  unemployment, Unemployment insurance, search externalities

Unemployment, labour-market flexibility and IMF advice: Moving beyond mantras

Olivier Blanchard, Florence Jaumotte, Prakash Loungani 18 October 2013

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Growth in advanced economies is gaining some speed. The IMF projects these economies will grow 2% next year, up from an expected 1.2% this year. The average unemployment rate in advanced economies is expected to inch down from its peak of 8.3% in 2010 to 8% next year. This is progress, but it is clearly not enough. The state of labour markets remains dismal for a number of reasons.

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Topics:  Labour markets Welfare state and social Europe

Tags:  unemployment, institutions, IMF, trust, Unemployment insurance, labour-market flexibility, EZ crisis, collective bargaining

Social job-search networks and the transition from school to stable employment

Francis Kramarz, Oskar Nordström Skans 17 October 2013

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The challenges faced by young workers transitioning from school into stable employment are a major concern throughout the OECD. The search for stable employment is a time-consuming process, particularly in countries without highly developed apprenticeship systems. Many young workers – especially the least educated – are caught struggling for years.

Considering the importance of this process we know surprisingly little about the strategies used by young job searchers looking for entry jobs. Two key insights arise from the large body of research on job-finding networks:

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Topics:  Labour markets

Tags:  unemployment, jobs, youth unemployment, graduates

How the great recession affected unemployment of non-Western Immigrants in the Netherlands

Jan van Ours 06 October 2013

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The labour-market position of immigrants in many European countries is weak – unemployment rates among immigrants are high, and employment rates are low (OECD 2011). There are various explanations for this. Immigrants often have lower educational attainment than natives, and fewer language skills. Furthermore, ethnic identity may be important.

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Topics:  Labour markets Migration

Tags:  unemployment, migration, Netherlands, Great Recession

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