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Transition dynamics in European labour markets during crisis and recovery

Vassilis Monastiriotis (), Corrado Macchiarelli () and Nikolitsa Lampropoulou

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

Abstract: The crisis has resulted in a substantial rise in unemployment in Europe and a notable divergence in unemployment rates and labour market outcomes post-crisis. In this paper, we offer a detailed examination of the transitional dynamics underpinning changes in employment, unemployment and inactivity across the EU member states during the long period from before the crisis until the recent recovery (2004-2016). We document substantial differences in transitional dynamics across countries and disparate shifts in these over time. We also find systematic cross-country differences in the medium- and long-run trajectories of employment and unemployment generated by these dynamics, which can broadly be associated with differences in labour market institutions and models of labour market regulation and industrial relations (varieties of capitalism or production regimes). Applying a counterfactual analysis, we further document how altering the dynamics of labour market transitions may contribute to reducing significantly the levels of unemployment, and cross-country disparities in these, across the EU.

Keywords: labour market transitions; unemployment; crisis; EU; counterfactual analysis (search for similar items in EconPapers)
JEL-codes: O52 J62 J88 P51 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2019-03-14
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Published in Comparative Economic Studies, 14, March, 2019, 61(2), pp. 213 - 234. ISSN: 0888-7233

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