In response to the Great Recession, unemployment insurance has been extended in many countries, but there is controversy over whether such extensions are optimal. Unemployment insurance entails direct fiscal costs, and encourages job seekers to prolong their search. The familiar benefit of unemployment insurance is that it allows the jobless to maintain their consumption. However, by reducing the search effort of other workers, it also improves a given worker’s chance of finding a job. Unemployment insurance extensions appear less costly when these search externalities are considered.
Rafael Lalive, Camille Landais, Josef Zweimüller, 09 November 2013
Olivier Blanchard, Florence Jaumotte, Prakash Loungani, 18 October 2013
The state of labour markets in advanced economies remains dismal despite recent signs of growth. This column explains the IMF’s logic behind the advice it provided on labour markets during the Great Recession. It argues that flexibility is crucial both at the micro level, i.e. on worker reallocation, and at the macro level, e.g. on collective agreements. It suggests that the IMF approach is close to the consensus among labour-market researchers.
Francis Kramarz, Oskar Nordström Skans, 17 October 2013
Modest recoveries in employment following the crisis mask severe youth unemployment. Because labour market struggles during the early stages of working life can have persistent negative effects, understanding job-finding networks among youth is key to forming pro-employment policies. This column analyses the transition from schooling to working life of Swedish youth. Close familial ties are important in job searches, especially among the less educated. Preliminary evidence suggests that family association can signal worker ability.
Jan van Ours, 06 October 2013
In absolute terms, the Great Recession affected the unemployment rate of non-Western immigrants more than that of native workers in the Netherlands. However, this merely reflects their generally weak labour-market position – job-finding rates are much lower for non-Western immigrants than they are for natives. There is little difference between the cyclical sensitivity of these two groups’ unemployment or job-finding rates. In relative terms, the labour-market position of non-Western immigrants is bad, but the Great Recession did not make it worse.
Tom Krebs, Martin Scheffel, 20 September 2013
Faced with stubbornly high and persistent unemployment in 2003-05 the German government implemented far-reaching labour-market reforms, the so-called Hartz reforms. This column shows that these reforms were highly successful in bringing down the non-cyclical component of unemployment in Germany but also argues that the Hartz reforms created winners and losers. This explains why these reforms have been hugely unpopular among the German public.
Hendrik van Dalen, Kène Henkens, 28 August 2013
In times of economic crisis, managers often take drastic measures to survive. This column presents new research on the preferences of managers from across Europe when faced with ‘downsizing’. It seems that, when recession bites, the instincts or ‘animal spirits’ of employers that were previously suppressed by prosperity or considered to be outdated resurface. European employers predominantly resort to offering early retirement packages (and to a lesser extent buy-outs) in response to the threat of downsizing, exacerbating, in the long run, the problems associated with Europe’s ageing population. The only notable exception to this rule is the response of Danish employers, who prefer to tackle this problem by reducing the working hours of their employees.
Laurent Gobillon, Peter Rupert, Étienne Wasmer, 23 July 2013
The unemployment rate in France is roughly six percentage points higher for African immigrants than for natives. Why? This column argues that the explanation is spatial: recent immigrants tend to have much longer commute times. Research suggests that in the region of 20% of the employment gap between the French minority and the French majority can be put down to commute times, but more research is needed, especially in France where research into the ethnic unemployment gap is scarce.
Andrew Oswald, 18 June 2013
Unemployment is once again the bane of the US and Europe. This column highlights an intriguing association between home ownership and high unemployment using US state-level data. Given the heavy subsidisation of and rise in home ownership, this association merits more attention from economists.
Bruno Crépon, Esther Duflo, Marc Gurgand, Roland Rathelot, Philippe Zamora, 24 April 2013
Youth unemployment in Europe seems to be sticking around. This column assesses youth unemployment policy in France using data from a controlled experiment. ‘Job counselling’ – a key French policy that prepares some job seekers for the recruitment process, and connects them with potential employers – seems to improve graduates' chances of employment only marginally. Moreover, the evidence suggests that what’s good for one graduate may be bad for another: the beneficiaries of intensive job counselling are more likely to find employment simply at the expense of other job seekers.
Javier Andrés, Rafael Doménech, 05 April 2013
Fiscal adjustment and structural reform are key parts of Eurozone bailout packages (or key features of government policy that aims to avoid such bailouts). This column argues that patience is the most prized virtue of policymakers implementing fiscal adjustment and structural reform. Reducing unemployment and fiscal consolidation are mutually reinforcing, but they move at different speeds.
John Driffill, 08 March 2013
How do we solve worryingly high unemployment across Europe? In a time of crisis, would reform actually exacerbate unemployment? This column argues that labour markets – especially in southern Europe – have to be reformed, presenting policy prescriptions to that effect. If we are to break the back of sluggish labour markets, policymakers need to learn from Europe’s success stories.
Laurence Ball, Daniel Leigh, Prakash Loungani, 26 January 2013
Will recovery be jobless? A broad array of analysts, from Vox columnists to McKinsey, are arguing that Okun’s Law is broken. This column presents new research suggesting that, in fact, Okun is alive and well. When output recovers, the jobs will come back, although employment will differ across countries. There may be good reasons for the structural reforms that many propose as a way to boost job creation, but undertaking them in the belief that Okun’s Law has broken down should not be one of them.
Rand Ghayad, William Dickens, 05 January 2013
US unemployment seems stuck at an unusually high level of 8%, prompting some to suggest a widespread skills mismatch. This column argues that a skills mismatch is not supported by the evidence. Rather, out of the possible explanations, it seems that any shift in the ratio between unemployment and vacancies is driven by either lower search efforts by the long-term unemployed or by a reduction in their employability.
David Fine, Susan Lund, 04 December 2012
Africa's recent growth is impressive, yet its rate of stable job creation is anything but. This column argues that Africa needs rapid growth in stable, wage-paying jobs in order to ensure future stable growth and prosperity. African governments must develop and implement targeted jobs strategies – which focus on labour-intensive, competitive industries – to get the most out Africa’s rapid economic emergence.
Henry Siu, Nir Jaimovich, 06 November 2012
The US economy is recovering. But what explains the stubborn malaise in its labour market? This column argues that future recovery from recession will likely be jobless because technological advances and mechanisation now enable troubled firms to shed middle-income jobs in favour of machines and automation. If these jobs are not recouped during subsequent economic recovery, future recoveries may well remain jobless.
Elke Jahn, Regina Riphahn, Claus Schnabel, 10 October 2012
Economic policymakers across Europe have sought to increase labour market flexibility by promoting the use of temporary employment. This column points to a possible trade-off between efficiency and equity when deregulating labour markets, suggesting that flexible forms of employment can be both a boon and a bane for labour markets and for society as a whole.
Stephanie Schmitt-Grohe, Martín Uribe, 16 September 2012
Since the onset of the great recession in peripheral Europe, nominal hourly wages have not fallen much from the high levels they had reached during the boom years in spite of widespread increases in unemployment. This paper analyses a number of national and supranational policy options for alleviating the unemployment problem, arguing that it is unlikely that a solution will come from within national borders.
Matthew Jackson, Yves Zenou, 09 September 2012
This paper provides an overview and synthesis of the literatures analysing games where players are connected via a network structure. While it focuses on the game theoretic modeling, it also also include some discussion of analyses of peer effects, as well as applications to diffusion, employment, crime, industrial organisation, and education.
Hermann Gartner, Christian Merkl, Thomas Rothe, 08 August 2012
The upside to a rigid labour market, so the argument goes, is that the downside isn’t so bad. This column compares evidence from the job markets in Germany and the US. It argues that Germany is actually far more volatile.
Alan Manning, Barbara Petrongolo, 03 August 2012
Will the London Olympics provide a major boost for employment in Stratford, as promised? This column presents evidence from a study in the UK, which, if applied to the Olympics, suggests that we shouldn’t count on it – many of the jobs will go to other Londoners.