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1. How Far from Full Employment? The European Unemployment Problem Revisited

Author:
Meryem Gökten, Philipp Heimberger, and Andreas Lichtenberger
Publication Date:
04-2024
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper analyses deviations from full employment in EU countries, compared with the US and the UK. We apply the Beveridge (full-employment-consistent) rate of unemployment (BECRU), derived from the unemployment-vacancies relationship. The BECRU is the level of unemployment that minimises the non-productive use of labour. Based on a novel dataset for the period 1970-2022, we find full employment episodes in selected EU countries (Germany, Sweden, Austria, Finland) during the 1970s. The European unemployment problem emerged in the 1980s and 1990s, as Beveridgean full employment gaps increased. In the run-up to the global financial crisis, full employment gaps declined, then increased during the Great Recession. Slack in labour markets increased initially during the pandemic. Labour markets became tighter when recovering from the COVID-19 crisis, but few countries hit full employment. Panel regressions highlight that hysteresis, labour market institutions, structural factors, macroeconomic factors and political factors contribute to explaining full employment gaps.
Topic:
Migration, European Union, Employment, Macroeconomics, Unemployment, Labor Market, OECD, and Income Distribution
Political Geography:
Europe

2. The Path Through: Early COVID-19 Job Loss and Labour Market Trajectories in Austria

Author:
Stefan Jestl and Maryna Tverdostup
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper examines the socio-demographic disparities evident in the early labour market response to the COVID-19 pandemic in Austria, relying on the register-based labour market career dataset from the Austrian Micro Data Center (AMDC) for the 2018-2021 period. The analysis focuses on the divergences in out-of-unemployment transitions and medium-term employment stability among those who lost their jobs early in the pandemic in contrast to the group of the longer-term unemployed. We document that individuals affected by job loss during the initial phases of the pandemic did not exhibit enduring scarring effects. Unlike their longer-term unemployed counterparts, they did not demonstrate persistent labour market detachment, prolonged periods of unemployment or a diminished success rate in re-employment. However, certain socio-demographic cohorts – notably, women, parents with two or more young children, and individuals with lower levels of education – faced disproportionate challenges during the pandemic. They were more inclined to transition into precarious employment arrangements and experienced lower levels of employment stability in the months following re-employment.
Topic:
Employment, Inequality, Unemployment, COVID-19, Labor Market, and Gender
Political Geography:
Europe and Austria

3. Gender and Education Gaps in Employment: New Evidence for the EU

Author:
Aleksandr Arsenev, Meryem Gökten, Philipp Heimberger, Andreas Lichtenberger, and Torben Schütz
Publication Date:
06-2024
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper analyses (age-adjusted) employment rates by gender and education. We find that male female gender gaps and high-low education gaps in employment vary markedly across European Union (EU) countries and regions, with larger gaps existing in Eastern and Southern Europe than in Nordic and Continental EU countries. We estimate that closing existing education gaps in employment between high and lower education levels would raise the employment rate in the EU for the year 2022 by 10.6 percentage points, whereas closing the gender gaps between men and women would lead to an increase of 2.5 percentage points. At the same time, closing both the gender and education gaps would raise the EU employment rate from 76% to 89% of the population. Furthermore, we provide new evidence on the cyclical behaviour of employment gaps, finding that gender gaps are procyclical. While female employment rates tend to be more resilient than male employment rates during economic downturns, male employment rates tend to grow at a faster pace than female employment rates during upswings. In contrast, education gaps are more countercyclical, as employment risks are more strongly concentrated where education is low.
Topic:
Education, Labor Issues, European Union, Employment, Inequality, Macroeconomics, Unemployment, Gender, and Income Distribution
Political Geography:
Europe

4. Structural Change, Income Distribution and Unemployment Related to COVID-19: An Agent-based Model

Author:
Branimir Jovanovic, Michael Landesmann, Oliver Reiter, and Torben Schütz
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
We study the distributional consequences of COVID-19 by using a stock-flow consistent agent-based model that captures some of the aspects of pandemic-related lockdowns. In particular, the model distinguishes between ‘essential’ and ‘non-essential’ industries, between jobs that can be done from home and jobs that must be carried out on site, and takes into account that firms need to hire a certain amount of overhead labour. Allowing for government-financed short-time working schemes and loan guarantees, we find that these policies significantly reduce the rise in firm liquidations and income inequality (the ‘Keynesian’ result). However, we also find that the absence of government policies leads to higher levels of productivity and GDP in the aftermath of the crisis, as it means that more of the less productive firms face liquidation during lockdowns (the ‘Schumpeterian’ result). The last finding must be taken with adequate caution as our model is designed to describe the short run, while statements about the long run would require the inclusion of additional features such as technological progress and the entry of new firms.
Topic:
Income Inequality, Macroeconomics, Unemployment, and COVID-19
Political Geography:
Europe and Austria

5. THE REGIONAL DIMENSION OF CORRUPTION RISKS IN THE CZECH REPUBLIC IN THE LIGHT OF DECENTRALIZATION

Author:
Yevheniy Haydanka
Publication Date:
07-2023
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
The article elucidates the relationship between decentralization and corruption risks in the Czech Republic. Economic inequality in the regions inevitably leads to corruption risks. The unemployment rate and the wage level determined the fragmentation of the Czech regions. Most Czech regions (8 out of 14) have an average unemployment rate (of 3-5%). The capital Prague (44 thousand korunas), as well as the Central Bohemian Region (35 thousand korunas), significantly differ from the rest of the Czech regions in wage level (within 31-32 thousand korunas). If the Czech regions are similar in the unemployment rate, there is a noticeable stratification between the capital and other regions. The findings of an expert survey among civil servants and deputies of regional Assemblies identified corruption and anti-corruption measures in the regions. The sphere of public administration is the most corrupt. Partially corrupt is the provision of administrative services. The greatest corruption risks result from the employees’ influence on funding sources (grants, subsidies and grants). On a 10-point scale, the average corruption in the regions is 5,8. More research prospects derive from studying corruption risks at the regional rather than national levels and expanding the geographical framework of the transition countries under research.
Topic:
Corruption, Risk, Unemployment, Decentralization, Wages, and Regionalization
Political Geography:
Europe and Czech Republic

6. Globalisation and automation as sources of labour-market competition, and support for European Union unemployment insurance

Author:
Brian Burgoon, Gregorio Buzzelli, Francesco Nicoli, and Stefano Sacchi
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Societies and economies are experiencing deep and intertwined structural changes that may unsettle the perceptions European citizens have of their economic and employment security. Such labour-market perceptions are likely in turn to alter people’s political positions. For instance, those worried by labour-market competition may prefer greater social protection to compensate for the accrued risk, or might prefer more closed economies where external borders provide protection (or the illusion of protection). We test these expectations with a conjoint experiment in 13 European countries on European-level social policy, studying how citizens’ demands align with parties’ political supply. Results broadly corroborate our expectations on the moderating effects of different types of concerns about perceived sources of labour-market competition on the features of preferred European-level social policy.
Topic:
Globalization, European Union, Unemployment, Automation, Labor Market, and Competition
Political Geography:
Europe

7. Youth unemployment in the South of the Mediterranean: A chronic challenge to development and stability

Author:
Hussein Suleiman
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
IEMed/EuroMeSCo
Abstract:
Unemployment among youth, aged 15 to 24 years old according to the International Labour Organization (ILO)’s definition, is the highest in the south of the Mediterranean, and in the larger Middle East and North Africa (MENA), compared to other regions in the world. This problem is exacerbated by very low labour force participation rates for this age group in the region, also compared to other regions. Furthermore, this issue of high youth unemployment is not a recent development but has been chronic in the region for at least the last three decades, as shown in detail further on. Youth unemployment south of the Mediterranean is a major challenge, and a symptom of deeply-rooted problems in the region’s labour markets. Unemployment is largely a youth unemployment issue. The problem is mainly one of new entrants’ transition from school age to work (Assaad & Krafft, 2016) but with consequences that could easily shape the entire life trajectories of individuals in the region and also have widespread impacts on their societies and even neighbouring countries. Such worrying and chronic challenges in the region’s labour markets have been largely shaped by structural deeply-rooted issues, reflected in the rise of work informality as a result of falling public employment, and a slow growth of formal private employment in the region throughout the last few decades, which will be discussed in detail in the paper. This paper aims to provide policy recommendations to address such chronic problems in the region, focusing mainly on Southern Mediterranean countries in North Africa, Egypt, Tunisia, Algeria and Morocco, excluding Libya because of the exceptional impact of the civil war on its labour market during the last decade. The paper first explores some prominent implications of low employment among the youth, for their own lives and their societies. It then proceeds to examine the magnitude of the problem in the selected countries and its development across the last three decades, relying mostly on ILO estimates, which, unlike national estimates, have a few missing entries in that extended period, and also allow for disaggregation by age groups and gender that might not always be available for national estimates. Next, the paper highlights the now-established explanation of the youth employment problem in the region and how it developed, before finally moving to the recommended policy measures, both domestic and through regional cooperation, to address this chronic problem that has played a major role in the radical political and social shocks in the region in the last decade.
Topic:
Labor Issues, Employment, Youth, and Unemployment
Political Geography:
Africa, Europe, Middle East, and Mediterranean

8. Economic and Social Impacts of FDI in Central, East and Southeast Europe

Author:
Doris Hanzl-Weiss and Branimir Jovanovic
Publication Date:
11-2022
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This study assesses the economic and social impacts of foreign direct investment (FDI) in 17 economies in Central, East and Southeast Europe (CESEE). More precisely, we investigate how different FDI inflows have affected various economic and social indicators, such as GDP growth, labour market outcomes, and poverty and inequality, for the period since the fall of communism until 2020. We pay particular attention to FDI that originates from the EU, as well as FDI from Germany and Austria, in order to evaluate whether their effects are different from the effects of FDI from other places of origin. We also examine whether there are differences in the impacts of different types of FDI – equity capital, reinvested earnings and intra-company debt, as well as of FDI that goes to different sectors of the economy – the primary, secondary and tertiary sectors. We find that FDI inflows have had, in general, a positive effect on economic growth in CESEE, and that this effect has been particularly strong for German and Austrian FDI. For total FDI, higher inflows of 1 percentage point (pp) of GDP are associated with 0.19 pp higher GDP growth. For FDI from Germany and Austria, this effect is five times higher – FDI inflows of 1 pp of GDP have led to 0.9 pp higher GDP growth. The positive GDP effects have come from the higher consumption and exports that the FDI has induced. FDI inflows have also reduced unemployment and increased wages, but have had no effects on labour productivity. Total FDI has had only limited effects on inequality and poverty, but FDI from Germany and Austria has been found to reduce both inequality and poverty, likely because they have benefitted mainly lower-income persons. There are differences in the effects of the different types of FDI, with reinvested earnings and equity capital having in general more beneficial effects than intra-company loans. Also, FDI in different sectors of the economy has had different effects, with inflows to the secondary and tertiary sectors having greater effects than inflows to the primary sector. The policy implications of these results are that CESEE economies should not give up on their efforts to attract more FDI, but also that their endeavours should be more targeted, focusing on investments that have greater economic and social impacts. Moreover, foreign investment should not be criticised for the perhaps unsatisfactory economic and social performances of the economies from this region. Instead, the reasons for this should be sought in domestic factors and in the modest growth of the European Union during the past two decades.
Topic:
Development, International Trade and Finance, Poverty, Foreign Direct Investment, Inequality, Economic Growth, and Unemployment
Political Geography:
Europe, Eastern Europe, Germany, and Austria

9. Istanbul Journal of Economics: Volume 72 Issue 1

Author:
Gökhan Karabulut
Publication Date:
01-2022
Content Type:
Journal Article
Journal:
Istanbul Journal of Economics
Institution:
Istanbul University Faculty of Economics
Abstract:
Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:
Debt, Development, Economics, Budget, Finance, Investment, Trade, Unemployment, and COVID-19
Political Geography:
Europe, Turkey, and Asia

10. Istanbul Journal of Economics: Volume 72 Issue 2

Author:
Gökhan Karabulut
Publication Date:
06-2022
Content Type:
Journal Article
Journal:
Istanbul Journal of Economics
Institution:
Istanbul University Faculty of Economics
Abstract:
Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:
Economics, Islam, Religion, Communications, Natural Resources, Finance, Internet, Economic Growth, Macroeconomics, Currency, Unemployment, Sustainability, COVID-19, BRICS, Labor Market, Economic Stability, Consumer Behavior, Rent-seeking, Energy, and Wages
Political Geography:
Europe, Turkey, and Asia