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Demand and structural views of Europe's high unemployment trap

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The paper looks at three questions. First, how much of European experience with high unemployment can be explained by the distinction between demand and structural causes? The answer is that there is much to be learned by this distinction but that it does not explain everything. So, second, what alternative approaches exist? The paper suggests that there exist two useful additional ways of looking at unemployment: hysteresis, the fact that transitory shocks lead to permanent increases in unemployment, and the study fo flows between jobs and no-jobs. Third, what does the analysis imply for policy making? The paper suggests that only broad attacks based on an explicit social contract are likely to succeed

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/Inseadwp1994/94-57.pdf

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