Bas B. Bakker and Li Zeng
Since the onset of the global financial crisis, there have been striking differences in labor market developments among European Union (EU) countries. Between 2008 and 2011, employment dropped by 14 percent in Ireland, but increased by 2 percent in Poland and Germany. These differences partly reflect differences in real GDP growth. Latvia, for example, with the largest decline in real GDP between 2008 and 2011, also experienced one of the largest reductions in employment. Poland, which had the largest increase in real GDP during this period, also had one of the best employment outcomes.
However, in a number of countries, the losses in employment far exceed what could be expected given the drop in output. This is particularly the case in Bulgaria, Ireland, and Spain. Spain had roughly the same decline in GDP as Italy, but employment dropped by only 2 percent in Italy, while in Spain it fell by 11 percent.
Bakker, B., and C. Klingen, eds., 2012, How Emerging Europe Came Through the 2008/09 Crisis: An Account by the Staff of the IMF’s European Department (Washington: International Monetary Fund).
Ball, L. M., D. Leigh, and P. Loungani, 2013, “Okun’s Law: Fit at Fifty?” NBER Working Paper 18668 (Cambridge: National Bureau of Economic Research).
Banco de España, 2013, “Spanish Non-Financial Corporations’ Debt since the Start of the Crisis. A Disaggregated Analysis,” Economic Bulletin, January 2013 (Madrid).
Bassanini, A., and R. Duval, 2006a, “Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions,” OECD Social, Employment and Migration Working Papers No. 35 (Paris: Organisation for Economic Co-operation and Development).
Bassanini, A., and R. Duval, 2006b, “The Determinants of Unemployment across OECD Countries: Reassessing the Role of Policies and Institutions,” OECD Economic Studies No. 42, 2006/1 (Paris: Organisation for Economic Co-operation and Development).
Bassanini, A., and R. Duval, 2009, “Unemployment, Institutions, and Reform Complementarities: Reassessing the Aggregate Evidence for OECD Countries,” Oxford Review of Economic Policy, Vol. 25, pp. 40–59.
Boeri, T., 2011, “Institutional Reforms and Dualism in European Labor Markets,” in O. Ashenfelter and D. Card (eds.), Handbook of Labor Economics, pp. 1173–1236 (Amsterdam: North Holland)
Cahuc, P., O. Charlot, and F. Malherbet, 2012, “Explaining the Spread of Temporary Jobs and Its Impact on Labor Turnover,” CEPR Discussion Papers No. 8864.
European Central Bank, “Integrated Economic and Financial Accounts by Institutional Sector,” available at http://sdw.ecb.europa.eu/reports.do?node=1000002340_ALLPDF
International Monetary Fund, 2010, “Chapter 3. Unemployment Dynamics during Recessions and Recoveries: Okun’s Law and Beyond,” World Economic Outlook, April 2010 (Washington).
Koo, R., 2008, The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession (Singapore: John Wiley & Sons (Asia) Pte. Ltd.).
Organisation for Economic Co-operation and Development (OECD), 2012, “Chapter 2. What Makes Labour Markets Resilient During Recessions?” OECD Employment Outlook (Paris).