Renewable energy and unemployment: A general equilibrium analysis

Using a three-sector general equilibrium model, the impact of renewable electricity support policies on the rate of equilibrium unemployment is analyzed. In a simple two-factor version of the model, the paper shows analytically that renewable electricity support policies lead to an increase in the rate of unemployment. A numerical analysis is conducted with an expanded three-factor model. In this version, most scenarios analyzed also lead to an increase in equilibrium unemployment. However, the paper identifies conditions in which renewable energy support policies can decrease the rate of equilibrium unemployment. In particular, when the elasticity of substitution between capital and labor is low, when capital is not mobile internationally, and when the labor intensity of renewable generation is high relative to conventional generation, renewable electricity support policies may reduce the rate of equilibrium unemployment. The model is parameterized to represent the US economy, such that the magnitudes of quantities can be observed. Although there is some variation in the results depending on parameters, the findings suggest in general that reducing electricity sector emissions by 10% through renewable electricity support policies is likely to increase the equilibrium unemployment rate by about 0.1–0.3 percentage points.     

Renewable energy and unemployment: A general equilibrium analysis

Using a three-sector general equilibrium model, the impact of renewable electricity support policies on the rate of equilibrium unemployment is analyzed. In a simple two-factor version of the model, the paper shows analytically that renewable electricity support policies lead to an increase in the rate of unemployment. A numerical analysis is conducted with an expanded three-factor model. In this version, most scenarios analyzed also lead to an increase in equilibrium unemployment. However, the paper identifies conditions in which renewable energy support policies can decrease the rate of equilibrium unemployment. In particular, when the elasticity of substitution between capital and labor is low, when capital is not mobile internationally, and when the labor intensity of renewable generation is high relative to conventional generation, renewable electricity support policies may reduce the rate of equilibrium unemployment. The model is parameterized to represent the US economy, such that the magnitudes of quantities can be observed. Although there is some variation in the results depending on parameters, the findings suggest in general that reducing electricity sector emissions by 10% through renewable electricity support policies is likely to increase the equilibrium unemployment rate by about 0.1–0.3 percentage points.     

Deriving natural rates of unemployment for sub-national regions: the case of Canadian provinces

In order to pursue informed stabilization policies, it is vital for policy-markers to have estimates of how much of the total unemployment rate can be classified as cyclical rather than natural unemployment. This paper describes a method for generating regional natural-rate estimates and applies this method to the case of Canadian provinces. Results indicate that unemployment insurance generosity and relative minimum wages play an important role in determining natural unemployment rates in Canadian provinces. One of the enduring characteristics of the Canadian labour market has been substantial and peresistent unemployment rate disparities across provinces. The results of this study indicate that these disparities are primarily explained by differences in provincial values of structural variables such as unemployment generosity and by differences in provincial sensitivities to these structural variables. A furher result is that variation in cyclical unemployment rates is substantially less in the traditionally high unemployment region of Atlantic Canada than it is in the traditionally low unemployment province of Ontario. This result implies that the most appropriate policies to reduce unemployment in Atlantic Canada are not regionally-applied expenditure policies but rather policies designed to reduce structural distortions in the provincial labour markets.     

Aggregate demand, the wage gap and unemployment in LDC's

This paper begins with the Todaro framework which relates LDC urban unemployment to the existence of an urban-rural wage gap. An explanation of the wage gap is developed from aggregate demand conditions in the urban sector, providing a Keynesian theory of LDC unemployment. Various policies to alleviate LDC unemployment are considered. Aggregate demand policies are most certain of success when the response of urban output to these policies is low, a situation which has usually been held to invalidate demand policies in LDC's. Import substitution policies promote unemployment and should be reversed or even replaced by rural sector subsidization.     

UNEMPLOYMENT POLICIES IN AN ECONOMY WITH ADVERSE SELECTION

This paper studies the effects of unemployment policies in a simple static general equilibrium model with adverse selection in the labour market. Firms offer a contract that induces the self‐selection of workers. In equilibrium, all unskilled workers are screened out and some skilled workers are rationed out. It is shown that the provision of unemployment insurance raises involuntary unemployment by encouraging adverse selection, while unemployment assistance – or subsidy to unemployment – reduces involuntary unemployment. A simple efficiency wage model is also presented to show that either of the two policies reduces employment by taxing effort and subsidizing shirking. The key is whether the social role of unemployment is a sorting device or a worker discipline device.     

Restrictive Macroeconomic Policies and Unemployment in the European Union

This paper looks at the impact the European integration process has had on the unemployment level of European Union member countries. While the persistence of relatively high unemployment in Europe is often attributed to supply-side factors, such as the rigidities of the labour market, this study contends that the major cause for the rise of unemployment in the EU has been the very macroeconomic policies of the EU itself. The paper argues that the continuous pursuit of deflationary policies and the macroeconomic constraint imposed first by the membership of the European Monetary System and, secondly, by the convergence criteria of the Maastricht Treaty, have been the real impediments to reducing unemployment.     

Imperfect Labor Mobility and Unemployment in a Dual Economy*

This paper examines the implications of imperfect labor mobility and unemployment in developing countries. We analyze the effects of wage subsidy policies, factor growth, and the change in labor mobility on unemployment and national income in an economy that is characterized by the existence of both imperfect labor mobility and urban unemployment.     

The Relationship between Output and Unemployment with Efficiency Wages

Abstract. We construct a stylised model of the supply side with goods and labour market imperfections to show that an economy can rationally operate at a low-effort state in which the relationship between output and unemployment is positive. We examine data from the G7 countries over 1960–2001 and find that only German data strongly favour a persistent negative relationship between the level of output and rate of unemployment. The consequence of this is that circumstances exist in which market imperfections could pose serious obstacles to the smooth working of expansionary and/or stabilisation policies and a positive demand shock might have adverse effects on employment.     

Suicide mortality,long-term unemployment,and labor-market policies: Evidence from European countries

Using data from 25 EU countries spanning the period 1999–2017, this paper examines the relationship between working-age suicides and changes in long-term unemployment and tests for mitigating effects through the implementation of labor-market policies. The estimates suggest higher suicide risks following a rising rate of long-term unemployment. Passive support policies have a suicide-decreasing impact. Among active policies, a significant suicide-decreasing effect is found for training and direct job creation. The results have important policy implications in that they suggest that strong commitment of governments to passive or to certain types of active labor-market policies can, on average, contribute to social stability and the welfare of populations.     

The British youth labour market in crisis

The paper argues that the British youth labour market is in a crisis with employment falling, unemployment and long-term unemployment rising rapidly. In section one the paper reviews the evidence and, in particular, looks at alternative measures of unemployment duration. Section two discusses various explanations for the growth of youth unemployment and dismisses the view that it is due to the increase in relative wages of young people. It is argued that the youth labour market has several distinctive features that make it more sensitive to cyclical fluctuations. Section three takes a brief look at various policies to alleviate the problem. Section four concludes the paper stressing that a reflation of the economy is necessary to make a significant impact on youth unemployment.     

Policy Influences on Unemployment: the European Experience

This paper considers the implications of four kinds of labour market policies for the 1980s rise in European unemployment: unemployment compensation, active labour market policies, employment protection legislation and taxation. It finds evidence that all have played a role in the determination of unemployment and discusses the mechanisms involved, the extent of the influence of each and the lessons learned from this experience. One of the main findings is that there is a trade‐off between wage inequality and unemployment. Policy has played a role in determining how a country responded to the negative macroeconomic shocks of the 1980s but policy alone cannot explain the full rise in European unemployment and North American wage inequality.     

Labour Market Policies and Long-term Unemployment in a Flow Model of the Australian Labour Market

This paper develops a general equilibrium job matching model, which is used to assess the impact of active labour market policies, reductions in unemployment benefits and reductions in worker bargaining power on long-term unemployment and other key macro variables. The model is calibrated using Australian data. Simulation experiments are conducted through impulse response analysis. The simulations suggest that active labour market programs (ALMPs) targeted at the long-term unemployed have a small net impact and produce adverse spillover effects on short-term unemployment. Reducing the level of unemployment benefits relative to wages and worker bargaining power have more substantial effects on total and long-term unemployment and none of the spillover effects of ALMPs.     

Rural-urban migration,informal sector and development policies: a theoretical analysis

"A theoretical model of rural-urban migration has been developed with special reference to the informal sector. The wage rate and employment in the informal sector are determined endogenously. The paper shows the simultaneous existence of open unemployment and informal sector in the urban area in migration equilibrium. The effects of alternative subsidy policies on unemployment and welfare of the workers are studied." The model is intended primarily for use in analyzing trends and policies in developing countries.     

Euro,crisis and unemployment: Youth patterns,youth policies?

This paper examines the occurrence of structural breaks in European unemployment associated with major institutional events. We uncover different responses of adult and youth unemployment rates. While adult unemployment is more prone to experience structural breaks, youth unemployment is more sensitive to business cycle oscillations, especially in the recent crisis. This calls for fine tuning policy measures specifically targeted to youth unemployed in bad times. One important implication of our findings is that generic labour market reforms are not effective enough to solve the youth unemployment problem. Educational policies raising average qualifications and helping school-to-work transitions are suitable complementary cures.     

Effect of labor market policies on unemployment when firms adapt their recruitment strategy

Firms conduct interviews to select who to hire. Their recruitment strategies affect not only the hiring rate but also job destruction rate as more interviews increase the chances of finding the right worker for the job; a link mostly overlooked in the literature. I model this recruitment behavior and investigate the effects of labor market policies on unemployment. These policies change the value of hiring the right worker, altering firms' incentives to conduct interviews. Policies further affect job creation and destruction when firms adapt their recruitment strategies. Net effect of a policy on unemployment depends on the magnitude of change in job creation versus destruction. Qualitative analysis reveals that the effect of a policy on unemployment is mostly weakened with the introduction of firms' recruitment behavior to the model. Firing taxes still increase unemployment, albeit at a lower rate. The effect of hiring subsidies on unemployment is even reversed: Unemployment increases with hiring subsidies if firms adapt. Minimum wage and unemployment insurance policies are also analyzed.     

International Capital Mobility in the Presence of Unemployment Insurance

The paper develops a general–equilibrium model with layoff unemployment to examine the effect of different unemployment insurance policies on international capital mobility. Conditions are derived under which capital will flow to the high–benefit country. Incentives for international capital movements are unaffected by how the burden of financing unemployment benefits is distributed between workers and firms. It is shown that capital outflows might have positive welfare effects for workers. This contrasts with results from standard models of international factor movements.     

经济政策主要变量对控制中国失业率有效性的实证检验

随着中国经济的增长,失业率却一直居高不下,因此国家采取各种手段进行宏观调控。在回顾各种经济学派对失业理论研究的基础上,着眼于经济政策对控制失业率是否有效,在简要分析货币政策和财政政策对失业率影响的基础上,选取1991—2011年中国城镇登记失业率、货币发行量以及财政支出,通过对三者进行单位根检验和Johansen协整检验,得到三者存在唯一的协整关系,并建立误差修正模型,得出货币发行量对失业率影响较大并且较稳定的结论,并通过格兰杰因果检验,得出货币发行量和财政支出与失业率之间都不存在因果关系,最后在实证研究的基础上对当前中国如何控制失业率提出相应的对策。     

Shocks and the unavoidable road to higher taxes and higher unemployment

This paper considers a matching model in which multiple steady-state unemployment rates exist if government expenditures and unemployment benefits are high enough. The focus on the extensive margin and a possible transition to a steady state with higher unemployment rates imply that the effect of tax rates can be high even when the elasticity between consumption and leisure is low. The matching friction limits transitions between steady states due to self-fulfilling expectations. After a sufficiently large increase in the unemployment rate and after a large enough increase in the tax burden caused by an exogenous increase in government spending, however, transition towards the high-unemployment steady state is unavoidable in an economy with generous unemployment benefits.     

INFLOW OF FOREIGN CAPITAL AND TRADE LIBERALIZATION IN A MODEL WITH AN INFORMAL SECTOR AND URBAN UNEMPLOYMENT

Abstract.  The paper has made an attempt to analyse the effects of liberalized trade and investment policies on welfare and open unemployment in a developing economy in terms of a three sector Harris-Todaro type general equilibrium model. Following empirical evidence it is assumed that there is wage rigidity in urban sectors, which leads to the simultaneous existence of open unemployment and an urban informal sector in the migration equilibrium. The paper deserves special attention for its interesting results which are completely opposite to those generated by the standard Harris-Todaro model.