Are Labor Market Institutions Really at the Root of Unemployment ...

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Figure 4: Unemployment Benefit Duration and Long Term Unemployment for 20 OECD
Countries, 2001
70
60
Italy
50
Belgium
Germany
% long term unemployed
40
30
20
Spain
Portugal
Japan
France
Denmark
UK
Ireland
y = -5.40x + 32.7
R 2 = 0.016
NZ
10
US
Canada
Norway
0
0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60
benefit duration index
Duration is measured as the ratio of the net replacement rate for the 60 th to the rate for the “initial period”
(1 st month), for single earner married couple without children, at 100% of the average production worker
wage (OECD 2004, table 3.1a and table 3.2a). Long term unemployment is the share of the unemployed out
of work at least 12 months (OECD Employment Outlook, 2002, Table G).
Figure 5: Change in Unemployment Benefit Duration and the Change in Long Term
Unemployment for 20 OECD Countries, 1991-2001
30
change in long term unemployment (% point)
Canada
NL
Norway
Denmark
Finland
NZ
20
-10
-20
Sweden
Germany
10
Japan
SWZ
Austria
US
France 0
-50.00 -40.00 -30.00 -20.00 -10.00
Australia
0.00 10.00 20.00 30.00
Portugal
Italy
Belgium
Spain
UK
y = -0.037x - 2.11
R 2 = 0.002
Ireland
-30
change in benefit duration index (% point)
Duration and long term unemployment for 1991 are defined as they are for 2001 (see Figure 4 for
definitions and sources for 2001). Sources for 1991: benefit duration: OECD Jobs Study, 1994, table 8.1;
long term unemployment: OECD Employment Outlook, 1996, Statistical Annex Table Q.