The ins and outs of European unemployment

Barbara Petrongolo and Christopher Pissarides

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In this paper we study the contribution of inflows and outflows to the dynamics of unemployment in three European countries, the United Kingdom, France and Spain. All countries are interesting in their own right and in the comparison with each other. Britain’s labour markets were strictly regulated up to the mid 1980s but they have been liberalized since then. France is still a regulated economy compared with Britain, with unemployment averaging about 8%. Spain has had the biggest rise in unemployment in Europe, reaching 24% in the mid 1990s, but policy reforms and fast growth since then brought it down to a level below France’s. We compare performance in these three countries making use of both administrative and labor force survey data. We find that the impact of the 1980s reforms in Britain is evident in the contributions of the inflow and outflow rates. The inflow rate became a bigger contributor after the mid 1980s, although its significance subsided again in the late 1990s and 2000s. In France the dynamics of unemployment are driven by the outflow rate virtually entirely, which is consistent with a regime with strict employment protection legislation. In Spain, however, both rates contribute significantly to the dynamics, perhaps as a consequence of the prominence of fixed-term contracts since the late 1980s.

JEL-codes: I38 (search for similar items in EconPapers)
Date: 2008-05
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Citations: View citations in EconPapers (164)

Published in American Economic Review, May, 2008, 98(2), pp. 256-262. ISSN: 0002-8282

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http://eprints.lse.ac.uk/3607/ Open access version. (application/pdf)

Related works:
Journal Article: The Ins and Outs of European Unemployment (2008)
Working Paper: The Ins and Outs of European Unemployment (2008)
Working Paper: The Ins and Outs of European Unemployment (2008)
Working Paper: The ins and outs of European unemployment (2008)
Working Paper: The Ins and Outs of European Unemployment (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:3607

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