Unemployment and sectoral competitiveness in Southern European Union countries. Facts and policy implications
Abstract
This article addresses the problem of the main factors driving sectoral unemployment in the Mediterranean countries most affected by this phenomenon. The choice of the four countries (Greece, Italy, Spain and Portugal) relies on the fact that they are dealing with the highest unemployment rates in the European Union and a certain typology of the economic structure. The originality of our research is offered by its direction, less tackled until now, namely the focus on the particularities of the economic sectors, trying to capture differences between them. The importance and the impact of the results are supported by the methods used to produce them, indicators and econometric models that are on trend and bring extra information to available studies. Descriptive statistics and mismatch indexes are used to outline the economic and labour market structure, while the econometric models built on panel data capture the impact of factors such as GVA growth, specialization and labour market mismatches on the unemployment rate at six economic sectors level. Our paper makes three contributions to the literature. First, we have demonstrated that agriculture is the sector of activity less sensitive to output fluctuations in terms of unemployment and can become a buffer for the jobless in times of recessions. Second, we have proved that industry, as a whole, is highly responsive to economic developments and bad specialization could worsen unemployment situation in this sector. Third, we showed that educational mismatches have a significant impact on unemployment in those sectors of activity that employ low educated workforce.
Keyword : unemployment, GVA growth, mismatches, economic sectors, panel data analysis, Okun’s law
How to Cite
Dimian, G. C., Aceleanu, M. I., Ileanu, B. V., & Șerban, A. C. (2018). Unemployment and sectoral competitiveness in Southern European Union countries. Facts and policy implications. Journal of Business Economics and Management, 19(3), 474-499. https://doi.org/10.3846/jbem.2018.6581
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Hall, C. (2016). Does more general education reduce the risk of future unemployment? Evidence from an expansion of vocational upper secondary education. Economics of Education Review, 52, 251-271. https://doi.org/10.1016/j.econedurev.2016.03.005
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Holden, S., & Sparrman, V. (2017). Do government purchases affect unemployment?. Scandinavian Journal of Economics, 120(1), 124-158. https://doi.org/10.1111/sjoe.12214
Hooper, V. (2017). Okun’s law revisited within the context of high eurozone unemployment: a note. E-Journal of International and Comparative Labour Studies, 6(2), 156-159.
Huang, H. C., & Yeh, C. C. (2013). Okun’s law in panels of countries and states. Applied Economics, 45(2), 191-199. https://doi.org/10.1080/00036846.2011.597725
ILO. (2014a). Greece: productive jobs for Greece. International Labour Organization, Research Department, Geneva.
ILO. (2014b). Spain. Growth with jobs. International Labour Organization, Research Department, Geneva.
ILO. (2014c). Portugal. Tackling the jobs crisis in Portugal. International Labour Organization, Research Department, Geneva.
Im, K. S., & Lee, J. (2001). Panel LM unit root tests with level shifts. Department of Economics, University of Central Florida, Orlando. Retrieved from https://pdfs.semanticscholar.org/794e/035e2af830b66f5d229cd444cbc8b34c3d83.pdf
Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115, 53-74. https://doi.org/10.1016/S0304-4076(03)00092-7
Im, K. S., Pesaran, M. H., & Shin, Y. (1997). Testing for unit roots in heterogeneous panels. Department of Applied Economics, University of Cambridge.
Johansen, K. (2002). Hysteresis in unemployment: evidence from Norwegian counties. Working Paper series No.6/2002, Department of Economics, Norwegian University of Science and Technology.
Kao, C. D. (1999). Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics, 90, 1-44. https://doi.org/10.1016/S0304-4076(98)00023-2
Karfakis, C., Katrakilidis, K., & Tsanana, E. (2014). Does output predict unemployment? A look at Okun’s law in Greece. International Labour Review, 153, 421-433. https://doi.org/10.1111/j.1564-913X.2014.00018.x
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Maddala, G. S., & Wu, S. (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61, 631-652. https://doi.org/10.1111/1468-0084.61.s1.13
Maria, J. R. (2016). Output and unemployment Portugal, 2008-2012. Working Papers 2016, Banco de Portugal, Lisbon. Retrieved from https://www.bportugal.pt/sites/default/files/anexos/papers/wp201603.pdf
Matuzeviciute, K., Butkus, M., & Karaliute, A. (2017). Do technological innovations affect unemployment? Some empirical evidence from European countries. Economies, 5(4), article number 48. https://doi.org/10.3390/economies5040048
Mitra, D., & Ranjan, P. (2010). Offshoring and unemployment: the role of search frictions labor mobility. Journal of International Economics, 81(2), 219-229. https://doi.org/10.1016/j.jinteco.2010.04.001
Mongelli, F. P., Dorrucci, E., Ioannou, D., & Terzi, A. (2015). Responses to the Euro area crisis: measuring the path of European Institutional Integration. Journal of European Integration, 37(7), 769-786. https://doi.org/10.1080/07036337.2015.1079373
Narayan, P. K., & Popp, S. (2010). A new unit root test with two structural breaks in level and slope at un-known time. Journal of Applied Statistics, 37, 1425-1438. https://doi.org/10.1080/02664760903039883
OECD Statistics. (2018). Retrieved from https://stats.oecd.org/
Ortego-Marti, V. (2017). Difference in skill loss during unemployment across industries and occupations. Economics Letters, 161, 31-33. https://doi.org/10.1016/j.econlet.2017.09.006
Paciello, M. C. (2010). The impact of the economic crisis on Euro-Mediterranean relations. The International Spectator, Italian Journal of International Affairs, 45(3), 51-69. https://doi.org/10.1080/03932729.2010.504622
Patrizia, O., & Giuseppe, R. (2015). Educational mismatch and unemployment scarring. International Journal of Manpower, 36(5), 733-753. https://doi.org/10.1108/IJM-03-2013-0048
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