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An Analysis of Firms' Compliance to Minimum Wage Legislation
Author(s) -
Fluckiger Yves,
Persson Inga
Publication year - 1990
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/j.1467-9914.1990.tb00233.x
Subject(s) - unemployment , economics , nairu , hysteresis , employment protection legislation , labour economics , term (time) , wage , persistence (discontinuity) , demographic economics , macroeconomics , unemployment rate , physics , geotechnical engineering , quantum mechanics , engineering
Abstruct The growth of long‐term unemployment is the main reason behind the persistence of high rates of unemployment in Western Europe. The paper presents the two main theories, duration dependency and sorting, that have been used to account for emergent and persistent long‐term unemployment. Both theories are hysteresis theories in the sense that they explain how the actual level of unemployment can be a function of past unemployment. Against this background the paper examines the evolution of long‐term unemployment in Sweden and its demographic composition. The focus is on what has happened to long‐term unemployment during the economic recovery experienced by Sweden and on the role of labour market policy measures targeted towards the long‐term unemployed in overcoming unemployment persistence. It is shown that there was a significant time‐lag before the recovery made inroads into the ratio of long‐term unemployment. There was a frunsifory, but also a permanent hysteresis effect. The reaction to the recovery varied between age groups, long‐term unemployment among older workers showing most persistence. There was an interaction effect in that the policy measures helped the long‐term unemployed take advantage of the recovery. The authors then introduce the concept of a nuturul rule of long‐ferm unemployment (NAIRLU) and make empirical estimates of this rate for Sweden. The character and composition of the Swedish natural rate of longterm unemployment is then examined.