American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets
American Economic Review
vol. 91,
no. 1, March 2001
(pp. 187–207)
Abstract
Behind similar unemployment rates in the United States and Portugal hide two very different labor markets. Unemployment duration is three times longer in Portugal than in the United States. Symmetrically, flows of workers into unemployment are three times lower in Portugal. These lower flows come in roughly equal proportions from lower job creation and destruction, and from lower worker flows given job creation and destruction. A plausible explanation is high employment protection in Portugal. High employment protection makes economies more sclerotic; but because it affects unemployment duration and worker flows in opposite directions, the effect on unemployment is ambiguous.Citation
Blanchard, Olivier, and Pedro Portugal. 2001. "What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets." American Economic Review, 91 (1): 187–207. DOI: 10.1257/aer.91.1.187JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
- J64 Unemployment: Models, Duration, Incidence, and Job Search