The ins and outs of UK unemployment
Jennifer Smith, 18 July 2011
Labour-market policy can try to make it easier to get hired or harder to get fired. This column asks which of these approaches policymakers should prioritise. Focusing on the UK, it finds that while job-finding rates could be improved, policies aimed at reducing the amount of job losses during a recession play an equally important role despite being less in vogue.
The labour market is in a continual state of flux. Workers are hired, fired, joining the labour force and leaving the labour force. The balance of these flows determines the unemployment rate.
Topics: Labour markets
Tags: employment protection, job search, UK, unemployment
Where are the jobs? Out there, somewhere. Perhaps.
Alfonso Rosolia, Federico Cingano, 17 July 2011
If you lose your job, can you find a new one with a little help from your friends? This column presents evidence that displaced Italian workers with more employable friends and social contacts are unemployed for a shorter period of time.
The global crisis hit jobs hard. According to the OECD, between 2007 and 2010 the number of employed people fell by almost 5 million throughout OECD countries and the number of job seekers rose by over 16 million.
Topics: Labour markets
Tags: jobs, networks, unemployment
Egypt’s demographic pressure – Where and how to create jobs?
Marga Peeters, 2 June 2011
After the drama of Egypt’s revolution comes the economic reality – one of the catalysts for regime change was the country’s high unemployment. This column shows that the growing number of young people entering the job market will only add to the pressure. It argues that job creation in the private sector should be the number one priority for stimulating Egypt’s economic growth.
Demographic developments place Egypt among the group of countries around the globe with the highest labour-supply growth for many years to come. The Egyptian economy can reap a demographic dividend from this human capital potential if the new entrants find a job (see also Noland and Pack 2008).
Topics: Development, Labour markets, Politics and economics
Tags: Arab uprising, Egypt, unemployment
Coping with crises: Policies to protect employment and earnings
Pierella Paci, Ana Revenga, Bob Rijkers, 19 April 2011
When a crisis hits, how should policymakers move to save jobs? This column reviews the evidence from policy responses to recent crises, highlighting the importance of being prepared. It finds that countries with prudent fiscal management and sound policy infrastructure tend to suffer relatively smaller and shorter negative shocks than others.
“There cannot be a crisis next week. My schedule is already full.” – Henry A Kissinger
Topics: Global crisis, Labour markets, Macroeconomic policy
Tags: financial crises, unemployment
The roots of the German miracle
Hermann Gartner, Christian Merkl, 9 March 2011
Policymakers the world over are staring at the strength of the German economy with envious eyes. This column argues that the root of Germany’s miracle lies in its “wage moderation” that was the result of labour-market policies in the years preceding the global crisis – a point that is often ignored in the public debate.
While the US labour market has seen a dramatic loss in jobs in the Great Recession, the German labour market has seemed to be unaffected – the number of employed workers has remained stable. This is all the more surprising as German GDP dropped more than in the US in 2009 (-4.7% vs. -2.7%). Some economists (e.g.
Topics: Europe's nations and regions, Labour markets
Tags: Germany, Labour-market reform, unemployment
Deviations from the Taylor rule and the dual mandate
Nicolas Groshenny, 2 February 2011
Was monetary policy in the US too easy between 2002 and 2006? This column argues "no”. It shows that the large and persistent deviations from the Taylor rule over that period were indeed consistent with the pursuit of the Federal Reserve's dual mandate.
According to its official mandate, the Federal Reserve sets the federal funds rate to achieve a dual goal of price stability and maximum sustainable employment. Since the global crisis erupted, debate has been raging over the Federal Reserve's conduct of monetary policy over the period 2002-2006.
Topics: Global crisis, Monetary policy
Tags: inflation, Taylor rules, unemployment
Is short-time work a good method to keep unemployment down?
Pierre Cahuc, Stéphane Carcillo, 1 February 2011
One method for combating unemployment during the global crisis has been the use of short-time work schemes that allow employers to temporarily reduce hours worked while compensating workers for the induced loss of income. In the first of two columns on labour markets, the authors present new evidence establishing that these schemes do indeed reduce unemployment. But they are no panacea and are not without their own problems.
Short-time compensation (or short-time work) aims at reducing lay-offs by allowing employers to temporarily reduce hours worked while compensating workers for the induced loss of income. At present, short-time work schemes are widespread among OECD countries, having grown in popularity during the Great Recession.
Topics: Labour markets
Tags: OECD, Short-term work, unemployment
Immigration, offshoring and US jobs
Gianmarco I.P. Ottaviano, Giovanni Peri, Greg C Wright, 18 November 2010
Manufacturing production and employment in the US has been in decline over recent decades, often with the finger pointed at immigration and globalisation. This column presents evidence from the US between 2000 and 2007 to show that immigrant and native workers are more likely to compete against offshoring than against each other. Moreover, offshoring's productivity gains can spur greater demand for native workers.
Manufacturing production and employment in the US has been in decline over recent decades. This loss of jobs is often blamed on a combination of multinational firms relocating jobs abroad and immigrant workers increasing competition in the labour market. But measuring the impact of globalisation on jobs is more difficult than that, even if many choose not to believe it.
Topics: International trade, Migration
Tags: immigration, manufacturing, offshoring, unemployment, US
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.
Vox users can download CEPR Discussion Paper 8100 for free here. To learn more about subscribing to CEPR's Discussion Paper Series, please visit the CEPR website.
Journalists are entitled to free DP downloads on request; please contact firstname.lastname@example.org. To learn more about subscribing to CEPR's Discussion Paper Series, please visit the CEPR website.
Topics: Labour markets, Macroeconomic policy
Tags: animal spirits, inflation, unemployment