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Unemployment in the 21st Century: The Interaction between Macroeconomic Shocks and Institutions

Lippe, Jesper LU (2019) NEKN01 20191
Department of Economics
Abstract
This paper analyses the driving factors of youth- and adult unemployment in the OECD-countries during the 21st century. Focus is on both macroeconomic shock variables, such as the GDP-gap, the real interest rate and total factor productivity-growth, and institutional variables, such as union density, active labour market policies, the tax wedge, the replacement rate and the share of temporary employment contracts. The interactions between shocks and institutions are also evaluated. This is done empirically in with a panel data regression analysis on 25 OECD-countries annually during 1999-2017. The result of the paper is that the replacement rate, the tax wedge and the real interest rate seem to increase the unemployment rates. Spending on... (More)
This paper analyses the driving factors of youth- and adult unemployment in the OECD-countries during the 21st century. Focus is on both macroeconomic shock variables, such as the GDP-gap, the real interest rate and total factor productivity-growth, and institutional variables, such as union density, active labour market policies, the tax wedge, the replacement rate and the share of temporary employment contracts. The interactions between shocks and institutions are also evaluated. This is done empirically in with a panel data regression analysis on 25 OECD-countries annually during 1999-2017. The result of the paper is that the replacement rate, the tax wedge and the real interest rate seem to increase the unemployment rates. Spending on active labour market policies, the share of temporary employment contracts and the GDP-gap are found to reduce the unemployment rates. Adding interactions to the model does not improve the fit very much. A variable on the size of the public sector is added to the analysis but found insignificant in explaining unemployment. (Less)
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author
Lippe, Jesper LU
supervisor
organization
course
NEKN01 20191
year
type
H1 - Master's Degree (One Year)
subject
keywords
Unemployment, Youth Unemployment, Adult Unemployment, OECD, Shocks, Institutions
language
English
id
8983258
date added to LUP
2019-08-08 10:32:10
date last changed
2019-08-08 10:32:10
@misc{8983258,
  abstract     = {{This paper analyses the driving factors of youth- and adult unemployment in the OECD-countries during the 21st century. Focus is on both macroeconomic shock variables, such as the GDP-gap, the real interest rate and total factor productivity-growth, and institutional variables, such as union density, active labour market policies, the tax wedge, the replacement rate and the share of temporary employment contracts. The interactions between shocks and institutions are also evaluated. This is done empirically in with a panel data regression analysis on 25 OECD-countries annually during 1999-2017. The result of the paper is that the replacement rate, the tax wedge and the real interest rate seem to increase the unemployment rates. Spending on active labour market policies, the share of temporary employment contracts and the GDP-gap are found to reduce the unemployment rates. Adding interactions to the model does not improve the fit very much. A variable on the size of the public sector is added to the analysis but found insignificant in explaining unemployment.}},
  author       = {{Lippe, Jesper}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Unemployment in the 21st Century: The Interaction between Macroeconomic Shocks and Institutions}},
  year         = {{2019}},
}