UNEMPLOYMENT AND SECTORAL COMPETITIVENESS IN SOUTHERN EUROPEAN UNION COUNTRIES. FACTS AND POLICY IMPLICATIONS

Gina Cristina Dimian,Bogdan Vasile Ileanu,Mirela Ionela Aceleanu,Andreea Claudia Șerban

doi:10.3846/jbem.2018.6581

Gina Cristina Dimian, Bogdan Vasile Ileanu + Show 2 more

Open Access

https://doi.org/10.3846/jbem.2018.6581

Copy DOI

Abstract

This article addresses the problem of the main factors driving sectoral unemployment in the Mediterranean countries most affected by this phenomenon. The choice of the four countries (Greece, Italy, Spain and Portugal) relies on the fact that they are dealing with the highest unemployment rates in the European Union and a certain typology of the economic structure. The originality of our research is offered by its direction, less tackled until now, namely the focus on the particularities of the economic sectors, trying to capture differences between them. The importance and the impact of the results are supported by the methods used to produce them, indicators and econometric models that are on trend and bring extra information to available studies. Descriptive statistics and mismatch indexes are used to outline the economic and labour market structure, while the econometric models built on panel data capture the impact of factors such as GVA growth, specialization and labour market mismatches on the unemployment rate at six economic sectors level. Our paper makes three contributions to the literature. First, we have demonstrated that agriculture is the sector of activity less sensitive to output fluctuations in terms of unemployment and can become a buffer for the jobless in times of recessions. Second, we have proved that industry, as a whole, is highly responsive to economic developments and bad specialization could worsen unemployment situation in this sector. Third, we showed that educational mismatches have a significant impact on unemployment in those sectors of activity that employ low educated workforce.

Highlights

The purpose of this article is to study unemployment problem in four Mediterranean countries (Greece, Italy, Spain and Portugal), most affected by this phenomenon
The analysis of the general economic situation has demonstrated that the unfavourable context in which the labour markets of the four countries function is due to several factors, including: a poor structure of economy, mismatch between the results of the education system and labour market needs, strong dependence on the economic cycle
The literature review part has focused on studies that looked at the relationship economic growth-unemployment rate, describing the manner in which Okun’s Law model has been applied and improved in order to capture the particularities of different countries

Summary

Introduction

The purpose of this article is to study unemployment problem in four Mediterranean countries (Greece, Italy, Spain and Portugal), most affected by this phenomenon. Our aim is to identify both economic weaknesses that have led to this situation and those sectors that could provide opportunities for sustainable economic growth and for reducing the unemployment rate. The analysis concerns the last twenty three years (1995–2017), a time of great contrasting economic transformations, of economic growth as well as severe recession. In the aftermath of the great recession (2008–2010), all the four countries experienced oscillating real output changes that ranged from an average of –4% in Greece to nearly –2% in Spain and Portugal (Eurostat, 2018). General government gross debt exceeded the value of GDP in Greece and Italy, while in Spain slightly surpassed 50% (Eurostat, 2018). The pace of economic reforms slowed down in these countries because of the crisis (Paciello, 2010)

Objectives

Results

Conclusion