European Union unemployment – a Euro problem?

31 Ott

by Merijn Knibbe [Documenti]

imm_1
I´ve divided the EU in three parts (which by the way also makes more economic sense than lumping countries together in a non-Euro hodgepodge): the Eurozone, emerging EU (the former communist very low wages weak unions flexible labour markets countries) and the non-Euro core (the UK, Sweden and Denmark).
 

imm_2

The elephant in the room: unemployment is in all three areas way too high. But in some areas it is higher than in others. And it shows again that the Eurozone as an aggregate does not do too well, especially after 2010. There is, however, more to this than meets the eye. Up to 2008 the total labour force in the Eurozone increased with 9% while the total labour force of emerging (submerging?) EU decreased with 3% which goes a long way to explain the differences in the development of unemployment up to 2008 (the labour force of the non-Euro core increased with 7% in this period). After 2008 differences in labour force growth were however much smaller (respectively +1%, 0% and +2%) and differences in developments can´t really be explained by differences in labour force growth anymore.

Remarkably, the very low wage rates of the emerging-EU countries did, contrary to neo-liberal ´labour is the problem, not the solution´ ideology, not lead to any kind of superior rates of job growth.

October 1 and 2, 2013

From Real World Economics Review Blog

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