Explaining unemployment trends in the Netherlands

Abstract

In this paper, a small macroeconomic model of the Dutch labour market is estimated. The model is used to detect the causes of the rise in unemployment since the early 70s. In contrast to existing empirical work, we treat labour supply as an endogenous variable. This adjustment appears to have serious consequences for the conclusions drawn. In particular, we show that the detrimental effect of the replacement rate on unemployment has been overestimated in earlier studies. Furthermore, we include contractual working time in the analysis. Our estimates imply that work sharing does reduce unemployment, but at a high cost. Because hourly wages rise in response to reduced working hours, aggregate output is damaged quite strongly. D

Wither Dutch Corporatism? Two Decades of Employment Policies and Welfare Reforms

“…However, some have argued (De Regt, 1997) that hourly wages are constant if working hours are reduced. But in more detailed work, Dur (1996) estimated a four-equation model: employment, unemployment share of long-term unemployed, real hourly wages and labour supply, for the period 1969±1994. He showed that employment in hours (annual employment in labour years multiplied by contractual annual hours) is not significantly affected by contractual hours.…”

Hourly wages and working time in the Dutch market sector 1962–1995

“…This specification is just a special case of equation (1), with γ h = 1 − γ a . The only exception for the Netherlands I am aware of is Dur (2001). He finds an estimate of 0.77 for γ h indicating that a reduction in hours worked leads to an increase in hourly wages, although significantly less than proportional.…”

Unemployed persons in border municipalities of Northern Banat in Serbia

“…There are also examples of South African countries showing that their residents are exposed to poverty and great social problems, because of a large number of unemployed individuals (Kingdon, Knight, 2006). The research conducted in the U.S. (Mukoyama, Sahin, 2009) and Holland (Dur, 2001) show that duration of unemployment in the last 30 years is getting longer and longer.…”