Why Is French Equilibrium Unemployment So High? An Estimation of the WS-PS Model.

Unemployment in France rose steadily from the early-seventies to the mid-eighties. Since the mid-eighties it has continued to experience fluctuations around a very high average level. Equilibrium unemployment theories are a useful framework within which to account for these developments. A multivariate estimation of the WS-PS model on macroeconomic quarterly data, which includes a larger number of potential unemployment determinants than earlier work, allows an enriched reading of the rise in French unemployment and of its persistence at a high level. We estimated it using a conditional VAR-ECM model, which is based upon the weak exogeneity properties of variables over the 1970-1/1996-4 period. The rise in equilibrium unemployment by 10 points in 25 years can essentially be explained by the rise in tax and social wedge, the slowdown in labour productivity and the deterioration of job security. Terms of exchange and skill mismatch account for only a slim part of the rise in equilibrium unemployment.


Issue Date:
2003-05
Publication Type:
Journal Article
DOI and Other Identifiers:
Print ISSN 1514-0326 (Other)
Online ISSN 1667-6726 (Other)
PURL Identifier:
http://purl.umn.edu/44062
Published in:
Journal of Applied Economics, Volume 06, Number 1
Page range:
127-156
Total Pages:
30
JEL Codes:
C32; E24




 Record created 2017-04-01, last modified 2017-04-27

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