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1992 | Book

Structural Unemployment

Editor: Professor Dr. Wolfgang Franz

Publisher: Physica-Verlag HD

Book Series : Studies in Contemporary Economics

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About this book

High and persistent unemployment rates in Europe during the eighties gave rise to a lively discussion about the nature and causes of joblessness. Among other sources structural unemployment was blamed for the lack of response of unemployment to increasing aggregate demand. Renewed attention was thus devoted to an analysis of the magnitude and the development of structural unemployment as well to its possi­ ble determinants. In this literature, the Beveridge curve experienced a resurrection and, at first glance, it seemed to be an appropriate tool to analyse the aforementioned issues. However, it was soon recognized that the Beveridge curve, i. e. the relation between unemployment and vacancies, was anything but stable, thus requiring a care­ ful distinction between dynamic loops around a (stable?) long-run Beveridge curve and possible shifts due to, say, an increasing mismatch between labor supplied and demanded. The controversy is far from being settled at the time of this writing. This book contains a collection of hitherto unpublished papers which are devoted to a theoretical and econometric analysis of structural unemployment. The papers put considerable emphasis on the question to what extent the Beveridge curve can serve as an adequate tool for such studies. The countries under consideration are Germany and Austria. In what follows a very brief summary of each paper will be outlined. Franz and Siebeck present, at some length, a theoretical and econometric analysis of the Beveridge curve in Germany.

Table of Contents

Frontmatter
A Theoretical and Econometric Analysis of Structural Unemployment in Germany: Reflections on the Beveridge Curve
Abstract
Unemployment in the Federal Republic of Germany has remained at a permanent high level for years. The explanation for this continued lack of jobs has shifted both in the academia and in the public towards considerations which blame “structural factors” as the major source of this problem. The prerequisite for an economic analysis of these presumptions is a theoretical framework which is able both to capture factors which may be viewed as determining structural unemployment and to allow for an empirical test of the relevance of these determinants. The Beveridge curve, i.e., the relation between vacancies and unemployment, is often used as an analytical instrument to identify the extent and the causes of structural unemployment. In recent years several theoretical and empirical studies employing the Beveridge curve have been carried out such as (1987) for Austria, (1988) and (1987) for the Federal Republic of Germany and, (1989), (1985) and (1988) for Great Britain, to name but a few. Most if not all studies of this type wind up with the conclusion that the Beveridge curve has shifted outwards thus indicating a higher degree of malfunctioning of labor markets. In Germany, as in some other countries, this result is also obtained by estimating a disequilibrium macro-model as is shown in the study by (1991).
Wolfgang Franz, Karin Siebeck
On the Identifiability of the Relation Between the Rate of Unemployment and the Vacancy Rate
Abstract
The massive unemployment in Europe which now persists for more than a decade has led many European governments to shift from Keynesian macroeconomic stabilization policy towards more microeconomically oriented labor market policies which intend to reduce labor market frictions. This shift in economic policy was motivated by the conviction that unemployment in the European countries is largely frictional and structural and is caused by a deterioration in the working of the equilibrating mechanisms between labor demand and labor supply.1
Axel H. Börsch-Supan
Developments and Causes of Mismatch Unemployment in West Germany
Abstract
The West German labor market has been in a state of disequilibrium for more than 15 years. The economic downturns in 1974/75 and 1981/82 — caused by, or at least coinciding with a jump in the price of oil — led to considerable declines in employment and synchronous to this a drastic increase in unemployment. In the subsequent recovery phases (1976 – 1980 and since 1983), the decline in employment has been more than compensated for; however, the reduction in unemployment has been relatively limited. To conclude from this that the upturn has bypassed the unemployed would be premature: changing demographics, the increasing propensity of women seeking employment, and the flow of immigrants from Eastern Europe have at the same time increased the number of potential wage and salary earners. Furthermore, competition and structural changes ensure constant flows of unemployment and vacancies in a market economy. On the one hand, firms are forced totally out of the market or they contract at least temporarily; on the other hand, new firms are founded or existing firms are expanded. The IAB’s1 job turnover analysis (Cramer and Koller, 1988) shows that, depending on the economic situation, the resulting hirings and firings make up a multiple of the total economic expansion or contraction. On top of this comes the movement of employees between existing positions. Therefore, the additional supply of labor on the job market competes as a part of job turnover with the redundant labor for the newly created or open existing jobs. There are always new or existing jobs to be filled; there are always unemployed persons looking again, or for the first time for work, or hitherto employed persons looking for another job.
Friedrich Buttler, Ulrich Cramer
Structural Unemployment in Austria
Abstract
In Austrian political discussion, as well as those of many other countries, structural and frictional factors have been increasingly made responsible for high and persistent unemployment. Such arguments point out that employers are reporting a lack of skilled labour and some people maintain that generous unemployment benefits and limited regional and occupational mobility have reduced the search intensity of the unemployed.
Josef Christl
Backmatter
Metadata
Title
Structural Unemployment
Editor
Professor Dr. Wolfgang Franz
Copyright Year
1992
Publisher
Physica-Verlag HD
Electronic ISBN
978-3-642-58163-2
Print ISBN
978-3-7908-0605-2
DOI
https://doi.org/10.1007/978-3-642-58163-2