The Great Recession. Tito Boeri Panel Discussion EALE-SOLE Montreal, June

Transcription

1 The Great Recession Tito Boeri Panel Discussion EALE-SOLE Montreal, June

2 European Perspectives Heterogeneity in Unemployment Response: Institutions Size of Shocks Nature of shocks A stress test of Social Europe(s) Poverty and safety nets Generational profile Designing supra-national labor/social institutions

3 Trans-Atlantic convergence 78 Labor Force Participation rate (population years old, %) Recession United States European Union 21

4 European unemployment divergence

5 Okun s law

6 Learning from the Outliers Germany Adjustment along hours, multiple jobs, and wages Short-time work, working accounts and mini(multiple)-jobs operating along intensive margin Collective, but decentralized bargaining allowing to trade wage reductions with less layoffs Spain Adjustment only along one margin: temporary employment

7 Some micro evidence on the Product demand shocks the nature of shocks %Firms reducing permanent employment 60% 50% 40% 30% 20% 10% Latvia Lithuania Estonia Germany Romania Bulgaria Hungary Croatia Slovakia Belgium Portugal Netherlands Slovenia Ireland France Italy Spain y = 0,5225x + 0,0711 R² = 0,5394 0% 10% 20% 30% 40% 50% 60% 70% 80% % Firms reporting decreasing demand

8 Employment adjustment and shocks to refinancing 60% Netherlands %Firms reducing permanent employment 50% 40% 30% 20% 10% 0% Germany Belgium France Latvia Hungary Estonia Lithuania Romania Croatia Slovakia Italy Portugal Spain Slovenia Bulgaria y = 0,3078x + 0,2276 R² = 0,1093 0% 10% 20% 30% 40% 50% 60% % Firms reporting debt refinancing problems

9 Borrowing from workers? 30% 25% Croatia %Firms with lower wages 20% 15% 10% Netherlands Latvia Lithuania Portugal Slovenia Bulgaria 5% 0% Estonia Hungary Germany France Romania Slovakia Italy Spain Belgium y = 0,2389x + 0,0343 R² = 0,2398 0% 10% 20% 30% 40% 50% 60% % Firms reporting debt refinancing problems

10 Issues raised by unemployment response (examples) Triple interaction between shocks, institutions and nature of shocks How do firms react to refinancing constraints in labour markets with hiring/firing frictions? Was it right to emphasise macro (rather than micro-level) wage flexibility in EU conditionality? How to diversify margins of adjustment under fiscal consolidation?

11 By how much should GDP decline for poverty to increase? Variation in (absolute) poverty rates -0.7% Countries: ES IT PT GR DK FI IS NO NL AT LU DE BE UK EE HU LV LT PL Vertical axis. Variations in absolute poverty rates obtained by fixing in real terms the poverty threshold at 60% of the median income in the initial year. Sources: EU-SILC, ECHP.

12 Is it the same threshold across Social Europe(s)? No higher in Eastern and Southern Europe, no significant correlation in the Nordics Southern Europe Northern Europe Variation in (absolute) poverty rates -0.5% Variation in (absolute) poverty rates Countries: ES IT PT GR Countries DK FI IS NO

13 By how much should unemployment rise for poverty to increase? Pooled Southern Countries Variation in (absolute) poverty rates 1.3 % Nordics Countries: ES IT PT GR DK FI IS NO NL AT LU DE BE UK EE HU LV LT PL

14 Coverage of UB and SA

15 Coverage of UBs by age (2012)

16 The age divide Dummy age in régressions of group specific unemployment against total unemployment as in Hoynes, 2011

17 Responsiveness of youth unemployment to GDP variation Estimates of Okun s law for youth (15-24) unemployment Source: author s calculation on EUSILC

18 The role of temporary employment Source: author s calculation on EUSILC

19 Poverty (unmet needs)

20 Issues raised by the stress test Holes in the safety nets in Southern Europe is it labour market dualism? is it design of UBs and SA? what was the role of fiscal consolidation? Scars of the Great Recession on younger generations in the South health family formation fertility retirement income

21 Designing a EU-wide stabilizer Vulnerability in banking is faced by promoting bank mergers. Vulnerability in social policy requires more risk pooling A EU wide social safety net? A EU wide unemployment benefit? How to design a Welfare Union rather than simply a Welfare State?

22 We have good data! Visit-Inps programme Access to social security archives (pensioners, 95% of workers, UB and SA registers, etc.) Interactions with practitioners Limited number of scholarships available In Rome