Changing Unemployment Rates in Europe and the USA: Institutional Structure and Regional Variation

Michael Kendix and Mancur Olson

Chapter 2 in Labour Relations and Economic Performance, 1990, pp 40-67 from Palgrave Macmillan

Abstract: Abstract Though one or the other of the familiar macroeconomic theories may explain fluctuations in unemployment over the business cycle, none of them explains the often substantial differences in unemployment rates in different areas of a country, or the dramatically different average long-run unemployment rates across countries, or the contrast between the extraordinary severity of unemployment in some historical periods and the near-absence of unemployment in others. All areas of a country, even if it is very large and diverse, experience the same monetary and fiscal policies, so these monetary and fiscal policies can hardly be sufficient to explain the often persistently different unemployment rates in different regions. Most familiar macroeconomic theories understandably focus on unanticipated changes in the money stock or in aggregate demand, but greatly different long-run average rates of unemployment in different countries are not likely to be adequately explained by unanticipated differences in the rate of growth of aggregate demand, because any such long-run differences eventually come to be anticipated. In any case, the observed differences in macroeconomic policies do not appear to be able to explain the long-run average differences in underutilisation of resources across countries without suspiciously elaborate or ad hoc supplementation; neither do they provide, by themselves, an adequate explanation of why average European unemployment rates were considerably lower than US rates in the first two decades after the Second World War, yet have been considerably higher than those in the USA for more than a decade.

Keywords: Unemployment Rate; Collective Action; Fiscal Policy; Employment Growth; Union Density (search for similar items in EconPapers)
Date: 1990
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-349-11562-4_2

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349115624

DOI: 10.1007/978-1-349-11562-4_2

Access Statistics for this chapter

More chapters in International Economic Association Series from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().