Explaining unemployment: some lessons from Nordic wage formation

Nymoen, Ragnar; Rødseth, Asbjørn

doi:10.1016/s0927-5371(02)00133-1

“…Notwithstanding the different approaches, our results are in accordance with Holden and Nymoen (2002) and Nymoen and Rφdseth (2003) who show that institutional or wage-pressure factors explain only a small fraction of the variation of unemployment in the Nordic countries. Our results are also in line with Henry, Karanassou and Snower (2000) who find that the NRU in the UK was reasonably stable around 4% over the 18 Actual unemployment rate…”

Section: The (Ir)relevance Of the Nrusupporting

confidence: 91%

The (Ir)relevance of the Nru for Policy Making: The Case of Denmark

Karanassou

¹

,

Sala

²

,

Salvador

³

2008

Scottish J Political Eco

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. We reconsider the central role of the natural rate of unemployment (NRU) in forming policy decisions. We show that the unemployment rate does not gravitate towards the NRU due to frictional growth, a phenomenon that encapsulates the interplay between lagged adjustment processes and growth in dynamic labour market systems. We choose Denmark as the focal point of our empirical analysis and find that the NRU explains only 33% of the unemployment variation, while frictional growth accounts for the remaining 67%. Therefore, our theoretical and empirical findings raise serious doubts as to whether the NRU should play a key instrumental role in policy making.JEL Classification: E22, E24, J21

show abstract

“…The producer price q and productivity pr are central variables in the model of wage formation. This is well established theoretically, see e.g., Nymoen and Rødseth (2003) and Forslund et al (2008), and these variables are also found to be main empirical determinants of the secular growth in wages in bargaining based systems. Based on theory and the empirical evidence, we expect the elasticity ι to be close to one.…”

Section: Optimal Price and Wage Levelssupporting

confidence: 57%

Moses: Model of Swedish Economic Studies

Bårdsen

¹

,

Reijer

²

,

Jonasson

³

et al. 2011

SSRN Journal

Self Cite

1

0

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract MOSES is an aggregate econometric model for Sweden, estimated on quarterly data, and intended for short-term forecasting and policy simulations. After a presentation of qualitative model properties, the econometric methodology is summarized. The model properties, within sample simulations, and examples of dynamic simulation (model forecasts) for the period 2009q2-2012q4 are presented. We address practical issues relating to operational use and maintenance of a macro model of this type. The detailed econometric equations are reported in an appendix. * We are grateful to Ulf Söderström for very helpful and detailed comments. Gunnar Bårdsen and Ragnar Nymoen worked as consultants for the Riksbank on this project. Terms of use: Documents in

show abstract

“…A reasonable assumption is that the elasticity ι with respect to productivity is close to unity, as in Nymoen and Rødseth (2003) [79]. The standard assumption about the sign of the coefficient for unemployment, , is that it is non-negative, hence − < 0, as already indicated.…”

Section: Wage-price Spiralmentioning

confidence: 94%

“…We next define two theoretical (latent) real wage variables: The targeted producer real wage from the point of view of the firms, rw f with ι > 0, 0 ≤ ω ≤ 1, ≥ 0, see Nymoen and Rødseth (2003) [79].…”

Section: Wage-price Spiralmentioning

confidence: 99%

Between Institutions and Global Forces: Norwegian Wage Formation Since Industrialisation

Nymoen

¹

2017

Self Cite

View full text Add to dashboard Cite

This paper reviews the development of labour market institutions in Norway, shows how labour market regulation has been related to the macroeconomic development, and presents dynamic econometric models of nominal and real wages. Single equation and multi-equation models are reported. The econometric modelling uses a new data set with historical time series of wages and prices, unemployment and labour productivity. Impulse indicator saturation is used to achieve robust estimation of focus parameters, and the breaks are interpreted in the light of the historical overview. A relatively high degree of constancy of the key parameters of the wage setting equation is documented, over a considerably longer historical time period than earlier studies have done. The evidence is consistent with the view that the evolving system of collective labour market regulation over long periods has delivered a certain necessary level of coordination of wage and price setting. Nevertheless, there is also evidence that global forces have been at work for a long time, in a way that links real wages to productivity trends in the same way as in countries with very different institutions and macroeconomic development.

show abstract

Explaining unemployment: some lessons from Nordic wage formation

Cited by 34 publications

References 25 publications

The (Ir)relevance of the Nru for Policy Making: The Case of Denmark

The (Ir)relevance of the Nru for Policy Making: The Case of Denmark

Moses: Model of Swedish Economic Studies

Between Institutions and Global Forces: Norwegian Wage Formation Since Industrialisation

Contact Info

Product

Resources

About