Determinants of Unemployment in the European Union. An empirical Study of the Federal Republic of Germany (FRG), France, Great Britain and Italy
- Hubert, Frank
- Historical Studies Data
AbstractSince the oil price shock in 1974 unemployment increased significantly and also did not really decline in periods of economic upswings in Europe. This is especially the case for the countries of the European Union; therefore we face a special need for explanation. Looking at the member states on finds considerable differences. Since 1977 the unemployment rate within the EU is higher than the average unemployment rate of all OECD countries. The economic upswing in the second half of the 80s relaxed the labor market but nevertheless the unemployment rate remained on a high level. This study deals with the development of unemployment between 1974 and 1993 in four different G7 countries: Germany, France, Great Britain and Italy. Besides the common trend of an increasing unemployment rate, there are significantly different developments within the four countries. The analysis is divided in two parts: the first part looks at the reasons for the increase in unemployment in the considered countries; the second part aims to explain the difference between the developments of unemployment during economic cycles in the different countries. After the description of similarities and differences of labor markets in the four countries it follows a long term analysis based on annual data as well as a short and medium term analysis on quarterly data. This is due to the fact that short and medium term developments are mainly influenced by cyclical economic developments but long term developments are mainly influenced by other factors like demographical and structural changes. A concrete question within this framework is if an increase in production potential can contribute to a decrease in unemployment. For the long term analysis among others the Hysteresis-hypothesis (Hysteresis = Greek: to remain; denotes the remaining effect; in this context: remaining of unemployment) used for the explanation of the persistence of a high unemployment rate. According to this approach consisting unemployment is barely decreased after economic recovery despite full utilization of capacity. According to the Hysteresis-hypothesis there are two reasons for this. The first reason is that for long term unemployed the abilities to work and the qualification level decreased, their human capital is partly devalued. The second reason is that employees give up wage restraint, because they do not fear unemployment anymore and therefore enforce higher real wages. Besides economic recovery companies are not willing to hire long term unemployed with a lower expected productivity for the higher established tariff wages. In the context of the empirical investigation a multiple explanatory approach is chosen which takes supply side and demand side factors into consideration. The short and medium term analysis refers to Okun´s law (=an increase in the unemployment rate is connected with a decrease of the GDP; if the unemployment rate stays unchanged, the GDP grows with 3% p.a.) and aims to analyze more detailed the reactions of unemployment to economic cycles. A geometrical lag-model is compared with a lag-model ager Almon. This should ensure a precise as possible analysis of the Okun´s relations and coefficients. Register of tables in HISTAT: A.: Unemployment in the European G7 countries B.: Analysis of unemployment in the Federal Republic of Germany C.: Basic numbers: International comparison A.: Unemployment in the European G7 countries A.1. Determinates of unemployment in the EU, Germany (1974-1993) A.2. Determinates of unemployment in the EU, France (1974-1993) A.3. Determinates of unemployment in the EU, Great Britain (1974-1993) A.4. Determinates of unemployment in the EU, Italy (1974-1993) B: Analysis of unemployment in the Federal Republic of Germany B.1. Growth of unemployment in the Federal Republic of Germany (1984-1991) B.2. Output and unemployment in the Federal Republic of Germany (1961-1990) C: Basic numbers: International comparison C.1. Unemployment in EU countries, the USA, Japan and Switzerland (1960-1996) C.2. Gainful employments in EU countries, the USA, Japan and Switzerland (after inland and residency concept) (1960-1996) C.3. Employees in EU countries, the USA and Japan (1960-1996) C.4. Population in EU countries, the USA and Japan (1960-1996)
1961 / 1993
United Kingdom (GB)
Types of sources: Scientific publications, Statistics published by the OECD Statistics published by the European commission Annual expert reports on the assessment of the overall economic development, Federal statistical office, Wiesbaden.
Number of Units: 37
Number of Variables: 111
- ZA8198 (Type: ZA-No.)
Hubert, Frank: Determinanten der Arbeitslosigkeit in der EU. Eine empirische Analyse für die Bundesrepublik Deutschland, Frankreich, Großbritannien und Italien. Frankfurt am Main, Berlin: Peter Lang Verlag 1997.
Update Metadata: 2020-10-21 | Issue Number: 86 | Registration Date: 2010-07-23