Unemployment, capital accumulation and labour market institutions in the Great Recession

  • Karsten Kohler
  • , Engelbert Stockhammer
  • , Alexander Guschanski

    Research output: Working paper

    Abstract

    The paper restates the post-Keynesian view of unemployment within a NAIRU framework. In the short run the private effective labour demand need not be downward sloping because of debt deflation and wage-led demand regimes. In the medium run the NAIRU will be endogenous because of the social norm character of wage setting and the supply-side effects of capital accumulation. Capital investment rather than labour market institutions is the crucial variable that explains changes in unemployment performance. We provide econometric evidence that the post-Keynesian view holds up well in the recession following the crisis 2008.
    Original languageEnglish
    PublisherPost-Keynesian Economics Study Group
    Number of pages18
    Publication statusPublished - 2014

    Publication series

    NameWorking Papers
    PublisherPost-Keynesian Economics Study Group
    No.PKWP1411

    Keywords

    • Economics and econometrics

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