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Did the pattern of aggregate employment growth change in the Euro area in the late 1990s?
[journal article]
Abstract The paper examines whether the pattern of growth in euro area employment seen in the period 1997-2001 differed from that recorded in the past and what could be the reasons for that. First, a standard employment equation is estimated for the euro area as a whole. This shows that the lagged impact of ... view more
The paper examines whether the pattern of growth in euro area employment seen in the period 1997-2001 differed from that recorded in the past and what could be the reasons for that. First, a standard employment equation is estimated for the euro area as a whole. This shows that the lagged impact of both output growth and real labour cost growth, together with a productivity trend and employment "inertia", can account for most of the employment developments between 1970 and the early 1990s. Conversely, these traditional determinants can only explain part of the employment development seen in recent years (1997-2001). Second, the paper shows sound evidence of a structural break in the aggregate employment equation in the late 1990s. Third, the paper provides some tentative explanations for this change in aggregate employment developments, using in particular country panels of institutional variables and of active labour market policies but also cross-sectional analyses. Among the relevant factors likely to have contributed to rising aggregate employment in recent years are changes in the sectoral composition of euro area employment, the strong development of part-time jobs, lower labour tax rates and possibly less stringent employment protection legislation and greater subsidies to private employment.... view less
Classification
Labor Market Research
Labor Market Policy
Free Keywords
Euro area; aggregate employment; demand for labour; labour market institutions; active labour market policies
Document language
English
Publication Year
2006
Page/Pages
p. 1783-1807
Journal
Applied Economics, 38 (2006) 15
DOI
https://doi.org/10.1080/00036840500427072
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)