Unemployment and happiness: A new take on an old problem
Andreas Knabe, Ronnie Schöb, Joachim Weimann, 17 November 2010
“We were happy in those days… Because we were poor”, goes the old Monty Python sketch. This column suggests there might be some shred of truth in this joke. It finds that while unemployed people report being less satisfied with their life in general, their emotional wellbeing experienced during day-to-day activities does not seem to suffer at all.
Recently, economists and policymakers alike have been paying more and more attention to subjective wellbeing (Graham 2010).
Topics: Frontiers of economic research
Tags: happiness, life satisfaction, unemployment, utility
Animal Spirits, Persistent Unemployment and the Belief Function
Roger E. A. Farmer , 8 November 2010
CEPR Discussion Paper 8100 re-examines the ability of old-Keynesian and new-Keynesian models to cope with persistence of unemployment. The author argues the an import input of persistent unemployment is the "animal spirits" of the unemployed. He tests an old-Keynesian model in which the Phillips curve is replaced by a belief function and finds it a better fit for the data than new-Keynesian variants.
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Topics: Labour markets, Macroeconomic policy
Tags: animal spirits, inflation, unemployment
The role of openness and labour market institutions for employment dynamics during economic crises
Elisa Gamberoni, Erik von Uexkull, Sebastian Weber, 29 September 2010
How do trade and labour market institutions affect employment during a crisis? This column finds that trade openness leads to sharper drops in employment, but also faster recoveries. High severance pay dampens employment contraction and very high unemployment benefits are associated with a stronger contraction. These findings suggest that global employment is set to remain stagnant for 2010 before recovering in 2011.
As a result of the global crisis and the related domestic and debt crises, global employment growth, according to the ILO’s Global Employment Trend (Jan 2010), slowed down to 0.7% in 2009 from 1.9% in 2007 and 1.4% in 2008. According to the ILO study, the slowdown occurred across all regions of the world except for the Middle East.
Topics: Global crisis, International trade, Labour markets
Tags: global crisis, labour market flexibility, unemployment
Trends in environmental concern as revealed by Google searches: The chilling effect of recession
Matthew E. Kahn, Matthew J. Kotchen, 21 August 2010
Is concern for the environment a luxury good? This column presents data from Google searches for the words “unemployment” and “global warming” by US users. It argues that recessions increase concerns about unemployment at the expense of people’s interest in climate change – in some cases leading them to deny its existence.
Google Insights is a publically available online tool for tracking aggregate Google search activity over time for specific geographic areas. Recent research shows that Google search terms are a powerful tool to predict public health epidemics (Pelat et al.
Topics: Environment, Global crisis
Tags: climate change, global warming, Google, unemployment
Welfare to work: Sticks rather than carrots
Jan van Ours, Bas van der Klaauw, 19 August 2010
Rising unemployment has forced policymakers to look for ways to get the unemployed back to work – to raise the “reemployment” rate of the unemployed. This column provides new evidence from the Netherlands suggesting that the stick of benefit sanctions is much more effective than the carrot of reemployment bonuses.
Given difficult circumstances, governments are considering various policy instruments to increase the “reemployment” rate of unemployed workers. This is no easy task – traditional active labour market policies are often not very successful.
Topics: Global crisis, Labour markets, Welfare state and social Europe
Tags: Eurozone crisis, global crisis, unemployment, welfare state
Challenges in the coming phase of globalisation: A sense of déjà vu
Otaviano Canuto, José Manuel Salazar, 28 June 2010
Economic integration transmitted the negative shocks of the crisis to workers across the world. As the global economic recovery begins, this column says that there is no cause for complacency or celebration. It warns that unemployment rates are expected to remain high in many countries and recommends designing government policies so that more may share in the gains from globalisation.
The global crisis has hit workers hard. The ILO (2010) estimates that unemployment increased by more than 30 million in 2009 to 212 million jobless. While openness can contribute to growth and helps to buffer domestic shocks, it also increases exposure to external shocks.
Topics: Global crisis
Tags: global crisis, globalisation, unemployment
Can China save the world by consuming more?
Hans Genberg, Wenlang Zhang, 25 April 2010
Would an increase in Chinese domestic demand meaningfully reduce global imbalances and improve US and European employment prospects? This column says that Chinese policy has a relatively small impact on developed economies' macroeconomic circumstances. It estimates that major reduction in Chinese saving would improve US employment by less than one quarter of a percentage point.
“China is making all of us poorer” writes Paul Krugman in his blog at the New York Times (Krugman 2010). He is referring to the current account surplus of the Chinese economy draining aggregate demand from the rest of the world and leading to lower employment and income.
Topics: International finance, Macroeconomic policy
Tags: Chinese saving, global imbalances, renminbi, unemployment
Farewell to the natural rate: Why unemployment persists
Roger E. A. Farmer , 6 January 2010
Most policymakers subscribe to the existence of a natural rate of unemployment. This column provides a visual history of unemployment, vacancies, and inflation in the US and says there is no natural rate. It suggests the economy can rest in any equilibrium on the Beveridge curve, as decided by the confidence of households and firms that pins down asset values.
Is the new-Keynesian approach (Clarida, Galí, and Gertler 2000) right? Here I suggest that US data on inflation, unemployment, and vacancies is best viewed through the lens of old-Keynesian theory.
Topics: Labour markets
Tags: Beveridge Curve, Keynesianism, unemployment
The predictive power of Google data: New evidence on US unemployment
Francesco D'Amuri, Juri Marcucci, 16 December 2009
The demand for up-to-date economic indicators has led researchers to use Google to improve the predictive power of their models. This column presents evidence from the US and Italy that using search trends on Google significantly increases the accuracy of forecasting unemployment.
Using Google trends is a trend in itself. In a recently published article, Ginsberg et al (2009) develop a simple model forecasting physician visits due to influenza-like illness using only the related query fraction on total queries as recorded by the Google search engine data, available weekly with a short delay.
Topics: Frontiers of economic research, Labour markets
Tags: unemployment, US
Offshoring and home employment
Sascha O Becker, Karolina Ekholm, Marc Muendler, 9 November 2009
How do offshoring firms reshape their domestic workforce? This column, using evidence from German multinationals, shows a positive correlation between offshoring and the firm’s proportion of highly educated workers. Offshoring firms have relatively more domestic jobs involving non-routine and interactive tasks. But offshoring is far from the only explanation for the shift towards more educated employees carrying out more advanced tasks.
The phenomenon of offshoring has currently moved to the sidelines of public debate – eclipsed by the financial crisis and deep global recession - but may very well soon return to the policy agenda (Blinder 2009).
Topics: International trade, Labour markets
Tags: Germany, offshoring, unemployment