Labour market policy, globalisation and the relationship between economic activity and unemployment dynamics in the Netherlands

Time: 2011, Tuesday June 21, 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Adam Elbourne (CPB)

Discussant: Marcus Kirchner (University Amsterdam)

Language: English

Registration:  Please register by sending an email to seminars@cpb.nl.

Abstract subject: This paper presents results from a time-varying SVAR model of output growth and unemployment for the Netherlands. Over the period 1984 to 2009 the Dutch economy has become more exible with smaller output losses and faster recoveries after demand shocks. The flip side of the greater flexibility is increased unemployment volatility. Regression analysis suggests that the most important policy change over the sample period for explaining the increased flexibility of the Dutch economy has been the reduction in replacement rates. It explains the vast majority of the fall in output lost after a demand shock, the speed at which the recovery in output takes place and the increased volatility of unemployment in the face of demand shocks. Importantly, it appears that employment recovers faster after a demand shock because of increasing globalisation. Less stringent employment protection legislation, a lower gross-net wage wedge and increased reliance on temporary workers also appear to have played a role in the faster return of unemployment to initial levels after demand shocks.

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