Dreger, Christian; Rubart, Jens --- "The Impact of Institutions on the Employment Threshold in European Labour Markets, 1979–2001" [2006] ELECD 119; in Mundschenk, Susanne; Stierle, H. Michael; Stierle-von Schütz, Ulrike; Traistaru-Siedschlag, Iulia (eds), "Competitiveness and Growth in Europe" (Edward Elgar Publishing, 2006)

Book Title: Competitiveness and Growth in Europe

Editor(s): Mundschenk, Susanne; Stierle, H. Michael; Stierle-von Schütz, Ulrike; Traistaru-Siedschlag, Iulia

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845426620

Section: Chapter 7

Section Title: The Impact of Institutions on the Employment Threshold in European Labour Markets, 1979–2001

Author(s): Dreger, Christian; Rubart, Jens

Number of pages: 21

Extract:

7. The Impact of Institutions on the
Employment Threshold in European
Labour Markets, 1979­2001
Christian Dreger

7.1 INTRODUCTION

Rigidities in national labour markets are widely seen as responsible for the
weak employment performance in Europe. The average unemployment rate
in the EU15 is around 8%, and is predicted to be stable at this level for the
near future. According to OECD measures, a substantial part is due to long
term unemployment: 45 (60)% of the unemployed are unemployed for longer
than 12 (6) months. Despite a gradual decline since the mid 1990s the rates
are highly persistent. Actually, long term unemployment rates exceed the US
level by a factor of 4.
The high unemployment rates are accompanied by lower employment and
participation rates.1 After a rise in the 1990s, EU15 employment rates are
65%, which is not far below the Lisbon goal (70%). But, the gaps are wider
for young people, older workers and women. Due to the weak economic
recovery, the rise in the employment rate will not continue in the near future.
At the same time, differences within the EU are larger than the difference
between the EU average and the US. Long term unemployment rates exceed
the average especially in Germany, Italy and Spain. Employment rates are
relatively low in Belgium, Greece, Italy and Spain. The correlation between
the long term unemployment and employment rate is ­0.8 over the last
decade. Hence, the unemployment problem is not caused by higher
participation.
To some ...