Explaining European unemployment. Testing the NAIRU theory and a Keynesian approach.

Stockhammer, Engelbert ORCID: https://orcid.org/0000-0002-5329-3535 (2000) Explaining European unemployment. Testing the NAIRU theory and a Keynesian approach. Department of Economics Working Paper Series, 68. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna.


Download (77kB)


The aim of the paper is to contrast and test the NAIRU theory and the Keynesian theory of unemployment econometrically. For the former, wage push variables are key in explaining the rise of European unemployment, for the latter accumulation is. 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 were used as wage push variables, and the growth of business capital stock as the accumulation variable. The NAIRU specification performed poorly, with only the tax wedge having a positive effect on unemployment as predicted. The Keynesian approach was more successful, with accumulation being statistically significant in all countries. Moreover, the tax wedge and accumulation are fairly robust to changes in the specification and can be pooled across countries. (author's abstract)

Item Type: Paper
Keywords: unemployment / NAIRU / Keynesian theory / labor market flexibility / accumulation
Classification Codes: JEL E24
Divisions: Departments > Volkswirtschaft
Depositing User: Repository Administrator
Date Deposited: 28 Feb 2002 09:18
Last Modified: 31 Oct 2019 08:02
URI: https://epub.wu.ac.at/id/eprint/938


View Item View Item


Downloads per month over past year

View more statistics