The determinants of unemployment dynamics in Greece

Abstract

In this paper, we investigate the determinants of unemployment dynamics in Greece. The economic recession alongside labour market reforms raised the inflow rate to and decreased the outflow rate from unemployment in the early crisis years. The gradual normalisation of economic conditions and the adoption of further structural reforms led to a decline in the inflow rate and an increase in the outflow rate. Our results are suggestive of the presence of an inverse relationship between unemployment and job vacancies in Greece (Beveridge curve), driven by the post-2008 economic recession. The decline in economic activity coupled with a more flexible labour market contributed to an increase in unemployment, i.e. an outward shift in the Beveridge curve.

Keywords: Unemployment, Inflow, Outflows, Beveridge, Labour market reforms

JEL Classification: J63, E32, J64,O52