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Unemployment, capital accumulation and labour market institutions in the Great Recession

Engelbert Stockhammer (), Alexander Guschanski () and Karsten Köhler
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Karsten Köhler: Kingston University, UK

European Journal of Economics and Economic Policies: Intervention, 2014, vol. 11, issue 2, 182-194

Abstract: This paper restates the post-Keynesian view of unemployment within a NAIRU framework. In the short run, the private effective labour demand need not be downward sloping because of debt deflation and wage-led demand regimes. In the medium run, the NAIRU will be endogenous because of the social norm character of wage setting and the supply-side effects of capital accumulation. Capital investment rather than labour market institutions is the crucial variable that explains changes in unemployment performance. We provide econometric evidence that the post-Keynesian view holds up well in the recession following the crisis of 2008.

Keywords: unemployment; NAIRU; post-Keynesian Economics; panel analysis (search for similar items in EconPapers)
JEL-codes: E12 E24 E25 (search for similar items in EconPapers)
Date: 2014
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