| Reference : The EU-US Unemployment Puzzle Revisited: Institutions, Demography, and Capital Flows |
| Scientific journals : Article | |||
| Business & economic sciences : Macroeconomics & monetary economics | |||
| http://hdl.handle.net/10993/31312 | |||
| The EU-US Unemployment Puzzle Revisited: Institutions, Demography, and Capital Flows | |
| English | |
| Marchiori, Luca [BCL - Banque centrale du Luxembourg > Recherche] | |
| Pierrard, Olivier [BCL - Banque centrale du Luxembourg > Recherche] | |
Sneessens, Henri  [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >] | |
| 2017 | |
| Journal of Demographic Economics | |
| Cambridge University Press | |
| Yes | |
| 2054-0892 | |
| [en] demographics ; capital flows ; overlapping generations ; unemployment | |
| [en] The historical evolution of the EU-US unemployment rate gap is often explained
in the literature in terms of asymmetric changes in labour market institutions. Population aging is another potential source of asymmetry. Asymmetric population aging may generate international capital flows and have a substantial impact on relative unemployment rates. In this paper, we examine whether the combination of institutions, aging and capital flows explains the rise in the gap between 1960 and 2010. To this end, we set up a two-region overlapping generation model with search unemployment in which we introduce the historical and projected changes in labour market institutions and demographic evolutions. We show that asymmetric institutional changes alone can reproduce a large part of the historical rise in the unemployment gap. However, this result does not hold anymore once we add asymmetric aging in closed economies. We are nevertheless able to restore and even improve the initial result when we allow for international capital mobility. | |
| Researchers | |
| http://hdl.handle.net/10993/31312 |
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