Transcript The Real Crisis: Global Unemployment

The Real EU Crisis:
Youth Unemployment
DALE T. MORTENSEN
BERGAMO CONFERENCE
JUNE 18, 2013
Introduction
 It is almost four years since the end of the Great
Recession, yet global employment continues to be
well below trend.
 In the EU, there has been no recovery and indeed
unemployment continues to rise, particular among
the youth in the southern tier.
 What are the explanations for the continuing
unemployment problem in the EU?
Unemployment Rates
EU 17-Dk blue
EU 25-Yellow
US-Black
Japan-Lt blue
Another (German) Economic Miracle?
Source: Rinne and Zimmermann, IZA Journal of Labor Policy 2012, 1:3
EU-US GDP Growth Rates
Difference in Unemployment Rates
Change in Unemployment Rate vs
Change in GDP Growth Rate, 2011-2012
Red-EU
Blue-non EU
Difference in GDP Growth Rates
EU Youth Unemployment Rates
EU: Youth Unemployment Rates by year
60
SP
GR
50
40
PT
IT
30
IR
FR
20
10
0
UK
EU
GE
“Scarring” Effects of Youth
Unemployment
Boeri, OECD Policy Forum for Jobs for Youth, Oslo, Sept 20, 2011
Unemployment Rates: Ages 15-24
Source: OECD
Unemployment Rates: Ages 25-34
Source: OECD
Unemployment Rates: Ages 35-44
Source: OECD
Unemployment Rates: Ages 45-54
Source: OECD
Short term contract reform in Italy
Tealdi, “How Do Employment Contract Reforms Affect Welfare?,” 2011
Boeri, SZW-CDB Conference on the Danish Model, February, 2011.
GR
ES
NL
IT
PT
DK
AU
FIN
BE
LX
GE
UK
Boeri, “Do we need more flexibility and security?,” March 2011
Tealdi Conclusions
Based on a quantitative Mortensen-Pissarides
model before and after reform …
Tealdi, “How Do Employment Contract Reforms Affect Welfare?,” May 2011
Boeri, “Do we need more flexibility and security?,” March 10, 2011
Summary of EU Unemployment Experience
 Unlike the US, EU unemployment rates increased
sharply after the Great Recession.
 Increased unemployment has been born primarily by
the young in the “financially distressed” countries.
 These facts call into questions the efficacy of EU and
IMF imposed “austerity” policies.
 Still, rigid “two-tier” labor market structures also a
major problem in need of reform.