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

Engelbert Stockhammer (), Alexander Guschanski () and Karsten Kohler ()

No PKWP1406, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: The 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 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)
Pages: 30
Date: 2014-05
New Economics Papers: this item is included in nep-lab and nep-mac
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http://www.postkeynesian.net/downloads/working-papers/PKWP1406.pdf First version, 2014 (application/pdf)

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