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Measuring Structural Unemployment: NAWRU Estimates in the Nordic Countries
Author(s) -
Holden Steinar,
Nymoen Ragnar
Publication year - 2002
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00273
Subject(s) - economics , unemployment , wage , unemployment rate , econometrics , structural unemployment , labour economics , macroeconomics
The non‐accelerating wage rate of unemployment (NAWRU indicator), used by the OECD as a measure of structural unemployment, has risen for the four Nordic countries Denmark, Finland, Norway and Sweden. In this paper we present stable empirical wage equations for the same countries over the period 1964–1994, in sharp contrast to the increased NAWRU estimates. The instability of the NAWRU estimates is an artefact of a misspecified underlying wage equation, and not due to instability in wage setting itself. JEL classification : E 24; E 31; E 64; J 51