The Unassuming Economist

Thirty years ago, a distinguished group of economists advocated a ‘two-handed’ approach to unemployment that targeted supply as much as demand. This column examines recent work on the effectiveness of cyclical and structural policies – the two ‘hands’ – targeting unemployment in Europe. It further considers the pressures from greater integration of capital and labour markets on the success of these reforms. Cyclical measures, particularly the easing of monetary policy, have been successful, but further structural reforms are still needed in many countries where average unemployment remains too high.

Read the rest at Vox.

Figure 1. Actual and predicted changes in unemployment, advanced economies, 2010 to 2015

Notes: The chart compares the actual change in unemployment in each country with what could have been predicted on the basis of the hisotrical relationship between unemployment and output (Okun’s Law).

The latest update of the International Jobs Report shows that:

• The global unemployment rate inched up to 5.7 percent this year after several years of decline. This reflects sharp increases in unemployment in the Latin America and Caribbean region and among fuel-exporting countries. Hence, while the total number of people unemployed around the globe will remain somewhat stable at about 175 million, several million people will be added to the ranks of the unemployed in these two groups of countries.

• For fuel exporters, the unemployment rate is expected to shoot up to 8 ½ percent next year. This is a percentage point above the level in 2015 and implies that an additional 4 million more people will join the ranks of the unemployed. For the Latin America and the Caribbean region, the unemployment rate is forecast to reach 9 percent in 2017, which is 2 percentage points above the 2015 level and will add nearly 6 million people to the ranks of the unemployed.

• Unemployment rates are expected to decline in most advanced economies, but remain well above historical averages in a few countries such as Greece, Cyprus, Portugal and Spain.

Read the full report.

Paul Krugman wrote in 2011 that unemployment was high “because growth is weak — period, full stop, end of story.” Six years later, has he been proven right? Read my post for Econbrowser to get the answer.

From Just Jobs Network:

Technology is fundamentally reshaping the nature of work worldwide, spurring heated debate. While some worry that deepening automation and the rapid growth of online and “on-demand” labor platforms are eroding job quantity and quality, others claim that productivity gains will translate into more and better jobs in the long run. With its 2016 signature volume, JustJobs Network introduces real case studies from around the world, examining how technology in its different dimensions is changing employment outcomes.

Key Themes

1. The discourse on technology highlights the trade-off between efficiency and equity, and policy frameworks must strike a balance between the two.
2. The on-demand economy demands new forms of regulation and worker representation. Policymakers must be proactive about harnessing its benefits and minimizing its costs.
3. Technology holds the promise of improving livelihoods and enabling labor market access for marginalized communities, but these effects should not be overestimated.
4. Workers are leveraging digital technologies to empower and organize themselves.
5. New technologies require rethinking “work design” – the way labor and technology are deployed, how work is executed and the kinds of tasks and interactions it involves.

Click here to see the report.