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Assessing the Impact of the Financial Crisis on Structural Unemployment in OECD Countries

Author

Listed:
  • Stéphanie Guichard

    (OECD)

  • Elena Rusticelli

    (OECD)

Abstract

The global recession is likely to results in higher structural unemployment for some time in many OECD countries. This paper assesses how the shock to aggregate unemployment as a result of the economic crisis may be transmitted to structural unemployment through hysteresis effects that occur through the rise in long-term unemployment. The estimated increase in structural unemployment due to the crisis is estimated at ¾ percentage point in the OECD as a whole, but the paper highlights wide cross-country differences with the largest increases expected in those European countries where unemployment is increasing most and where institutional settings remain less favorable than elsewhere, notably Spain and Ireland. Évaluation de l'impact de la crise financière sur le chômage structurel dans les pays de l'OCDE La recession mondiale est susceptible d.entrainer un chomage structurel plus eleve pendant un certain temps dans de nombreux pays de l'OCDE. Ce document examine comment le choc sur le chomage global resultant de la crise economique peut etre transmis au chomage structurel par des effets d.hysteresis qui se produisent via la montee du chomage de longue duree. L'augmentation estimee de chomage structurel resultant de la crise est estimee a 3/4 de point de pourcentage pour l'OCDE dans son ensemble, mais cette etude souligne les differences importantes entre pays, avec notamment les plus grandes augmentations attendues dans les pays europeens ou l'environnement institutionnel demeure moins favorable qu'ailleurs, notamment l'Espagne et l'Irlande.

Suggested Citation

  • Stéphanie Guichard & Elena Rusticelli, 2010. "Assessing the Impact of the Financial Crisis on Structural Unemployment in OECD Countries," OECD Economics Department Working Papers 767, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:767-en
    DOI: 10.1787/5kmftp8khfjg-en
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    More about this item

    Keywords

    chômage; chômage de longue durée; courbe de Phillips; hysteresis; hystérésis; institutions; institutions; long-term unemployment; NAIRU; NAIRU; Phillips curve; unemployment;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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