Explaining European Unemployment: Testing The Nairu Hypothesis And A Keynesian Approach
International Review of Applied Economics,
Vol. 18, No. 1, 3–23, January 2004
ISSN 0269-2171 print; ISSN 1465-3486 online/04/010003-21 © 2004 Taylor & Francis Ltd.
DOI: 10.1080/0269217032000148618
Correspondence Address: Engelbert Stockhammer, Department of Economics, University of Economics
and Business Administration, Augasse 2-6, A-1090 Wien, Austria.
Email: [email protected]
Explaining European Unemployment: Testing the
NAIRU Hypothesis and a Keynesian Approach
ENGELBERT STOCKHAMMER
IJ12PETCRDna068raneIetniyR.0negspu1rl4eteaA0noa larr80arb1rty mc02te0&i h/6r2oe0t0 90nSn0AF2-tat096r2ro l41at91o cinR.c27fskc le1g1heiEvs7m,ac i 0OmeLo3wnntm2dol 0ieomnr0fe i0Ac 11sp4U4p86nl65iie1v-d38e 4rEs8ict6oyn oofm Eiccsonomics and Busines s Adminis trat ion,Au gas se 2–6A-109 0 WienAust riaengelb ert.s [email protected]
ABSTRACT The aim of the paper is to compare the NAIRU hypothesis regarding
European unemployment and a Keynesian approach to the issue and to evaluate them
econometrically. For the NAIRU explanation, wage push variables are key in explaining
the rise of European unemployment, for a Keynesian approach it is capital accumulation
that is key. The theories are tested using time series data for Germany, France, Italy, the
UK and the USA, using the seemingly unrelated regression method (SUR). Unemployment
benefits, union density and the tax wedge are used as wage push variables, and the
growth of business capital stock as the accumulation variable. The NAIRU specification
performs poorly, with only the tax wedge having a positive effect on unemployment as
predicted and only unemployment benefits having a negative effect on employment growth.
However the results are not robust ...
Please
login to view the full paper