Oesch, Daniel (2009): Explaining high unemployment among low-skilled workers: Evidence from 21 European and Anglo-Saxon countries, 1991-2006.
Download (144kB) | Preview
The OECD’s unemployment problem is largely concentrated among low-skilled workers. In this paper, four explanations of low-skilled workers’ unemployment are examined: wage-setting institutions, employment regulation, globalization, and monetary policy. The analysis is based on pooled regressions for 21 affluent countries over the period 1991-2006. Our findings provide no support for the hypothesis that low-skilled workers’ employment prospects are hindered by legal minimum wages or strict employment protection. Likewise, large wage inequality does not seem to be a necessary condition for countries to achieve low rates of low-skilled unemployment. In contrast, investment in active labour market policies pays off in form of less low-skilled unemployment. Additionally, low real interest rates are associated with significantly less low-skilled unemployment. Hence, low-skilled workers’ job prospects seem enhanced by a combination of active labour market policies with a monetary policy that allows the economy to fully exploit its growth potential.
|Item Type:||MPRA Paper|
|Original Title:||Explaining high unemployment among low-skilled workers: Evidence from 21 European and Anglo-Saxon countries, 1991-2006|
|Keywords:||unemployment, low-skilled workers, wage inequality, monetary policy|
|Subjects:||J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J60 - General
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity
|Depositing User:||Daniel Oesch|
|Date Deposited:||03. Mar 2010 18:25|
|Last Modified:||12. Feb 2013 13:45|
Baccaro, L. and Rei, D. (2007) ‘Institutional determinants of unemployment in OECD countries: does the deregulatory view hold water’, International Organization 61: 527-569. Ball, L. (1999) ‘Aggregate demand and long-run unemployment’, Brookings Papers on Economic Activity 1999 (2): 189-236. Bassanini, A. and Duval, R. (2006) ‘The determinants of unemployment across OECD countries: reassessing the role of policies and institutions’, OECD Economic Studies 42 (1): 7-86. Bentolilla, S., Dolado, J. and Jimeno, J. (2008) ‘Does immigration affect the Phillips curve? Some evidence for Spain’, Banco de España, Documentos de Trabajo 0814. Blanchard, O. (2005) ‘Monetary policy and unemployment’, in: Semmler, W. (ed.), Monetary Policy and Unemployment: the US, Euro-area and Japan, pp. 9-15. London: Routledge. Blanchard, O. (2006) ‘European unemployment: the evolution of facts and ideas’, Economic Policy 34: 8-65. Blanchard, O. and Summers, L. (1986) ‘Hysteresis and the European Unemployment Problem’, NBER Macroeconomics Annual 15-78. Blanchard, O. and Wolfers, J. (2000) ‘The Role of Shocks and Institutions in the Rise of European Unemployment’, Economic Journal 110 (462): 1-33. Blanchflower, D., Saleheen, J. and Shadforth, C. (2007) ‘The impact of the recent migration from Eastern Europe on the UK Economy’, Working Paper, Bank of England. Borjas, G. (1998) ‘The impact of immigrants on employment opportunities of natives’, in: Jacobson, D. (ed.), The Immigration Reader, pp. 217-230. Oxford: Blackwell. Borjas, G., Freeman, R. and Katz, L. (1997) ‘How much do immigration and trade affect labor market outcomes’, Brookings Paper on Economic Activity 1: 1-90. Bradley, D. and Stephens, J. (2007) ‘Employment performance in OECD countries. A test of neoliberal and institutionalist hypotheses’, Comparative Political Studies 40 (12): 1486-1510. Calmfors, L. and Driffill, J. (1988) ‘Centralization of wage bargaining’, Economic Policy 6: 13-61. Esping-Andersen, G. (2000) ‘Who is harmed by labour market regulations? Quantitative evidence’, in: Esping-Andersen, G. and Regini. M. (Eds.), Why deregulate labour markets? pp. 66-98. Oxford: Oxford University Press. Fitoussi, J.-P., Jestaz, D., Phelps, E. and Zoega, G. (2000) ‘Roots of recent recoveries: labor reforms or private sector forces’, Brookings Papers on Economic Activity 1: 237-311. Flückiger, Y. (1998) ‘The labour market in Switzerland: the end of a special case?’, International Journal of Manpower 19 (6): 369-395. Freeman, R. and Schettkat, R. (2001) ‘Skill compression, wage differentials and employment: Germany vs. the US’, Oxford Economic Papers: 582–603. Gangl, M. (2004) ‘Welfare states and the scar effect of unemployment: a comparative analysis of the United States and West Germany’, American Journal of Sociology 109 (6): 1319-1364. Gautier, P., van den Berg, G. , van Ours, J. and Ridder, G. (2002) ‘Worker turnover at the firm level and crowding out of lower educated workers’, European Economic Review 46: 523-538. Kenworthy, L. (2000) ‘Quantitative Indicators of Corporatism: A Survey and Assessment’, MPIfG Discussion Paper 00/4, Max-Planck-Institut, Köln. Kenworthy, L. (2002) ‘Corporatism and unemployment in the 1980s and 1990s’, American Sociological Review 67 (3): 367-388. Kenworthy, L. (2003) ‘Do affluent countries face an incomes-job trade-off?’, Comparative Political Studies 36 (10): 1180-1209. Kenworthy, L. (2007) ‘Toward improved use of regression in macro-comparative analysis’, Comparative Social Research 24: 343-350. Krugman, P. (1994) ‘Past and prospective causes of high unemployment’, Economic Review, Federal Reserve Bank of Kansas City, issue Q IV: 23-43. Iversen, T. and Wren, A. (1998) ‘Equality, employment, and budgetary restraint: the trilemma of the service economy’, World Politics 50: 507-546. Layard, R., Nickell, S. and Jackman, R. (2005) Unemployment. Macroeconomic Performance and the Labour Market, Oxford University Press (2nd edition). Manning. A. (2003) Monopsony in Motion. Imperfect Competition in Labour Markets, Princeton: Princeton University Press. Martin, J. and Grubb, D. (2001) ‘What works and for whom: a review of OECD countries’ experiences with active labour market policies’, Swedish Economic Policy Review 8 (2): 9-56. Nickell, S. and Bell, B. (1995) ‘The collapse in demand for the unskilled and unemployment across the OECD’, Oxford Review of Economic Policy 11 (1): 40-62. Nickell, S. and Bell, B. (1996) ‘Changes in the distribution of wages and unemployment in OECD countries’, American Economic Association Papers and Proceedings 86: 302-308. Nickell, S. and Layard, R. (1999) ‘Labor market institutions and economic performance’, Handbook of Labor Economics Vol. 3 (3), Chapter 46: 3029-3084. Nickell, S. and van Ours, J.C. (1999) ‘The Netherlands and the United Kingdom: A European Unemployment Miracle?’, Economic Policy 15 ( 30): 135-180. OECD (1998) ‘Making the most of the minimum: statutory minimum wages, employment and poverty’, OECD Employment Outlook, 31-79. OECD (2004a) ‘Employment protection regulation and labour market performance’, OECD Employment Outlook, 61-125. Paris. OECD (2004b) ‘Wage-setting institutions and outcomes’, OECD Employment Outlook, 127-181. Paris. OECD (2005) ‘Labour market programmes and activation strategies: evaluating the impacts’, OECD Employment Outlook, 173-208. Paris. OECD (2008) Education at a glance, OECD: Paris. Scharpf, F. (2000) ‘Economic Changes, Vulnerabilities, and Institutional Capabilities’, in Scharpf, F. and Schmidt, V. (eds.), pp. 21-124, Welfare and Work in the Open Economy. Vol. I. From Vulnerability to Competitiveness, Oxford: Oxford University Press. Siebert, H. (1997) ‘Labor Market Rigidities: at the root of unemployment in Europe’, Journal of Economic Perspective 11 (3): 37-55. Solow, R. (2000) ‘Unemployment in the United States and in Europe - a contrast and the reasons’, CESifo Working Paper 231: 1-15. St. Paul, G. (2004) ‘Why are European countries diverging in their unemployment experience’, Journal of Economic Perspectives 18 (4): 49-68. Traxler, F. and Kittel, B. (2000) ‘The bargaining system and performance. A comparison of 18 OECD countries’, Comparative Political Studies 33 (9): 1154-1190. Visser, J. (1998) ‘Two Cheers for Corporatism. One for the Market’, British Journal of Industrial Relations 36 (2): 269-292. Winkelmann, L. and Winkelmann, R. (1998) ‘Why are the unemployed so unhappy? Evidence from panel data’, Economica 65: 1-15. Wood, A. (1995) ‘How trade hurt unskilled workers’, Journal of Economic Perspectives 9 (3): 57-80.