Crises, Labor Market Policy, and Unemployment by Davide Furceri download in pdf, ePub, iPad
For example, it is positive in the United States, but negative in France. Conclusion The global financial crisis reversed the steady cross-country convergence of the Okun relationship observed since the s. Advanced economies looking more alike Since the s, several broad developments have changed the relationship between unemployment and output. But within that average value, countries differed greatly. Female labor force participation in advanced economies had surged since the s, but began to stabilize in the mids and then decline.
Before the Great Moderation, the Okun correlation in the typical country was large. The rate rose much less in the United Kingdom and barely changed in Germany, despite larger declines in gross domestic product. In some countries this relationship is positive, suggesting that the remaining workforce is used more intensively in a downturn. One takeaway is that the Okun correlation is mostly a result of the total employment component. In other countries, the relationship is negative, suggesting less intensive use of the workforce.
This is not explained by a reversal of secular trends in labor markets. During and since the Great Recession, countries have adjusted all three factors, but have placed different emphasis on them.
Data since indicate that the Okun correlation rose to levels last seen in the s. Rather, it reflects how countries responded to the crisis. All of these developments have affected the Okun correlation. Hours per worker and productivity contribute to the correlation, but are less important. If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item.
That unemployment goes down when output goes up and vice versa is hardly surprising. Germany, the United Kingdom, and the United States are good examples of three ways businesses in advanced economies responded to the global financial crisis. It also allows you to accept potential citations to this item that we are uncertain about. These differences in emphasis probably contributed to divergent paths of recovery from the crisis.
When demand declines, businesses can lay off workers, especially if the drop in demand is viewed as permanent. This publication is edited by Sam Zuckerman and Anita Todd. In the United States, the unemployment rate nearly doubled from its pre-recession level.
Then came the global financial crisis. Similarly, the events of recent years should lead to a consideration of how labor market institutions can be improved. As a result, when output changed, more of the adjustment took place through employment, which in turn showed up in the unemployment rate.
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