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Unemployment has emerged as one of the most pressing economic concerns in the majority of OECD countries. However, experiences differ across countries as regards the level, volatility and composition of unemployment. Nevertheless, a common feature in many countries is that given levels of wage acceleration, capacity utilisation and vacancy rates are now associated with much higher levels of unemployment than used to be the case two decades ago. Countries seem to differ in the extent to which rising trend unemployment reflects a rise in equilibrium unemployment ("the natural rate") or slow adjustment towards an equilibrium level which is lower than trend unemployment. A number of factors can be pointed to as affecting either equilibrium unemployment or the speed of adjustment in labour markets. Such factors comprise both labour market institutions and policies as well as features that are outside the realm of structural policies. A review of the literature as well as the examination ...

Economics

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This paper deals with trends and cycles of unemployment and labour-force participation. Empirical evidence on both trends and cyclical movements in unemployment and participation is presented. Some of the mechanisms behind the observed developments are also analysed, examining how well they fit into different theoretical frameworks. The implications for the assessment of labour market slack of the observed interplay between unemployment and participation are discussed. The paper ends by presenting some unexplained puzzles concerning the interplay between trends and cycles of unemployment and participation ...

Economics

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Cyclical fluctuations in economic activity have moderated over time but the extent and dynamics of volatility remain different across OECD countries. A reason behind this heterogeneity is that countries exhibit different degrees of resilience in the face of common shocks. This paper traces divergences in resilience back to different policy settings and institutions in labour, product and financial markets. Using pooled regression analysis across 20 OECD countries over the period 1982-2003, the paper identifies the impact of policy settings on two dimensions of resilience: the impact effect of a shock and its subsequent persistence. Policies and institutions associated with rigidities in labour and product markets are found to dampen the initial impact of shocks but to make their effects more persistent, while policies allowing for deep mortgage markets lower persistence and thereby improve resilience. Combining these two dimensions of resilience, the paper then uses the estimated equations to derive indicators of resilience for the OECD countries concerned, based on their current or recent policy settings. Three groups of countries emerge. In English-speaking countries, simulations suggest shocks have a significant initial effect on activity but this impact then dies out relatively quickly. By contrast, in many continental European countries the initial impact of shocks is cushioned but their effect linger for longer, with the cumulated output loss tending to be larger than in English-speaking countries. Finally a few, mostly small, European countries combine cushioning of the initial shock with a fairly quick return to baseline.

Economics

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Business & Economics --- Economic History --- OECD countries --- Economic conditions.

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Business & Economics --- Economic History --- OECD countries --- Economic conditions. --- Economic policy.