Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2008:14: Causes of structural unemployment in Finland and Sweden 1990-2004

Klas Fregert () and Jaakko Pehkonen ()
Additional contact information
Klas Fregert: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Jaakko Pehkonen: School of Business and Economics, Postal: School of Business and Economics , P.O. Box 35 , FIN-40014 University of Jyväskylä , Finland

Abstract: We describe the size and timing for comprehensive as well as decomposed measures of unemployment. We then test for and confirm a change in the structural rate of unemployment by finding structural breaks in the Okun and Beveridge relations. Finally, we employ existing empirical models to examine the contributions of exogenous factors to the changes in the structural unemployment rate. We present separate estimates for the mid-1990s, late 1990s and early 2000s. They indicate that the structural rate has decreased in both countries, but has not returned to the levels of the 1980s.

Keywords: Structural unemployment; Okun curve; Beveridge curve; Finland; Sweden

JEL-codes: E24; E65; J64

49 pages, September 19, 2008

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