The European unemployment dilemma

Lars Ljungqvist, Thomas J. Sargent

    Research output: Contribution to journalArticlepeer-review

    Abstract

    Post-World War II European welfare states experienced several decades of relatively low unemployment, followed by a plague of persistently high unemployment since the 1980s. We impute the higher unemployment to welfare states' diminished ability to cope with more turbulent economic times, such as the ongoing restructuring from manufacturing to the service industr, adoption of new information technologies, and a rapidly changing international economy. We use a general equilibrium search model in which workers accumulate skills on the job and lose skills during unemployment.

    Original languageEnglish (US)
    Pages (from-to)514-550
    Number of pages37
    JournalJournal of Political Economy
    Volume106
    Issue number3
    DOIs
    StatePublished - Jun 1998

    ASJC Scopus subject areas

    • Economics and Econometrics

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