Unemployment around the North Atlantic, 1948-2014

Please cite the paper as:
Merijn Knibbe, (2015), Unemployment around the North Atlantic, 1948-2014, World Economics Association (WEA) Conferences, No. 2 2015, The European Crisis, 1st October to 1st December, 2015

This paper has been included in the publication
“The European Crisis”

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Abstract

In 2008 William Mitchell and Joan Muysken argued that after about 1978 there had been a shift from public policies aimed at full employment at the macro level to full employability at the micro level, accompanied by a larger emphasis on the budget balance of the government and low inflation. At the same time, unemployment rose to levels unheard of in decades. After 2008, however, unemployment increased to even higher levels, while extending the analysis to countries from the ‘fringe’ of Europe and to data on ‘broad’ unemployment reveals that extreme levels of unemployment in these regions were a rule instead of an exception.  Flow data on the labour market show that during crises there is a temporary and relatively small increase of inflows into unemployment and a decrease of outflows out of unemployment, which, however, combine into a fast increase in the stock of unemployment – which is not countered by higher rates of outflow and inflow after the crisis. This evidence shows that major crises tend to shift countries to a semi-permanent situation of higher unemployment. Instead of countering this situation, after 2008 public policies shifted away from even the idea of employability and, led by EU institutions, a public discourse which tended to stress the moral and ethical advantages of extreme unemployment, like increased levels of ‘discipline’, developed. At the same time and led by EU institutions, government transfers to banks increased, leading to a deterioration of government balances and less room for government spending.  The solution proposed by Mitchell and Muysken – a job guarantee financed by money printing and shredding – might still be a good idea but has to be accompanied by a central bank buying bad debts from banks (the catch: increased government guidance for bank lending) while, considering the elevated levels of unemployment, allocation of unemployed over the guaranteed jobs might have to be enhanced by using the same kind of planning algorithms which are, at the moment, used to match donor kidneys with patients.

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  • Maria Alejandra Madi says:

    Your paper refers to a crucial issue that arises in the debate about current economic policy since the job guarantee strategies do not seem to rely on traditional Keynesian aggregate demand management. In your opinion, comparing the job guarantee and the aggregate demand solutions, which are the micro and macro advantages of the public policies based on the “employer os last resort” in the current context?

  • pasbaxo says:

    A population fall within the EU fromoff 2001 (between 30 and 40%) did not solve the problem of unemployment, possibly to be explained
    by a smaller portrait maintaining the same relations within the variables field as before .The solution to distribute the quantity of hours offered
    by the employers equally over the quantity of hours offered by the employees. This could mean less hours working a day per employee,
    demanding a monetary inclusion amount to every participant to guarantee their life utilities.An equal distribution of salary height would be optimal.
    wheras primary needs serving employees are indispensable to academics often losing a utility aspect in their work.