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Unemployment and Labour Market Transition Probabilities

Published online by Cambridge University Press:  17 August 2016

Jules Theeuwes
Jules Theeuwes*
Affiliation:
Vrije Universiteit Amsterdam(*)
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Extract

I. ANALYSING UNEMPLOYMENT: A RESEARCH PROGRAM

There are many kinds of unemployment. An average economist should be able to enumerate at least a dozen without forward notice. This embarrassing abundance of definitions gives a clear indication of the trouble we have pinning unemployment down.

Unemployment is generally considered to be an undesirable quantity in a market economy. Although not all of it. Part of it is unavoidable and even considered necessary for an efficient matching of jobs and workers. In this sense one could define —although this would not be easy— an optimal quantity of unemployment taking into account the institutions and stochastics of the labour market. Unemployment under and above this optimum would be inefficient. The next question is: can one avoid too much or too little unemployment through policy measures at reasonable costs? There is no definite answer to that. A lot of heated discussion in macroeconomics focusses on this subject.

Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 52 , Issue 3-4: Symposium on Unemployment in Europe , December 1986 , pp. 209 - 225
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1986 

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Footnotes

*

Thanks are due to W. Kloek for letting me use the aggregate data in section 3. I would also like to thank R. van Opstal for his permission to use the estimation results in section 2. They come out of our 1985 report for the Organisation for Strategic Labour Market Research (OSA) in The Hague. Participants of the Conference on « Unemployment in Europe » in Maastricht, April 1986 and especially Daniel Weiserbs gave very valuable comments on a previous version of this paper. Without implicating them, I would like to thank them all.

References

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