A Research On The Reasons Of European Unemployment In Recent Years

To study the reasons of European lasting high unemployment rate since 1970s has always been the task the scholars studying Europe have been paying close attention to. Lately, although their research has come to some new conclusions about the reasons of European Unemployment, there is still not an identical view. This paper, on the basis of classical unemployment theories, absorbing some reasonable results from the former researches while facing European present unemployment situation, analyzes the main reasons of the European unemployment in different periods by means of Philips Curve, theoretically and empirically. It tries to find out a reasonable explaining to European unemployment in a systematic comprehensive way.The paper is arranged as follows. In Chapter 1, it shows the overall situation and the four typical traits of European unemployment problem. And then it introduces some Labor Market Institutions and the rigidity of the labor market. This chapter is the objective and practical base for the further study of the problem. In Chapter 2, it reviews the basic classical unemployment theories, and then summaries their developments and applications to the practical European unemployment respectively. In the last section of this chapter, it gives a summary of the former researches of the western economics about the European long-lasting high unemployment rate. This chapter is the theoretical foundation for studying the problem. In Chapter 3 which is the focus of this paper, it obtains several main reasons about European unemployment in the different periods comprehensively and systematically. In the first section of this chapter, it investigates the reason of European unemployment on the basis of Equilibrium Unemployment Rate or Natural Unemployment Rate and the Philips Curves. We find the mutual effects between unemployment and the Labor Market Institution were the prime reason of European unemployment from 1970s to 1980s. We call it ratcheting. And the rigidity of the Labor Market Institution enlarges the ratcheting. In the second section of this chapter, through our study about the rise of oil price in the beginning of 1970s, we find it gave a big shock to the world economics. Of course Europe is included. It was the rise of the oil price that led to European unemployment directly. At the same time, it gives an impetus outside to the ratcheting. So it was the direct reason of European Unemployment in 1970s to 1980s. In the third section of this chapter, we take the macroeconomics policies into account. We find that integration of the Europe makes themembers limited in using macroeconomics policies. The constrictive financial and money policies deteriorate the problem of European unemployment. It makes European unemployment rate continually be in a high level from the beginning of 1990s to now. In the last section of this chapter, we summarize our study about the reasons of European unemployment. In the first section of the last chapter, based on the above-mentioned study, we give our suggestions to solve European unemployment problem. In the section two, we firstly show similitude between the situation of Chinese unemployment and European. Through this comparison, we get some revelations to solve Chinese unemployment problems or prevent the same situation happening in China. Hereto we end our study.To contrast with other researches, this paper has its' own attributes. It points out the traits of European unemployment, and shows why it has such traits. It gives comments on all kinds of unemployment theories about their applicability to the practical European unemployment. And it provides a theory basis to all kinds of explanations. And the same time, it put forward a new view, ratcheting, as the basic reason of European unemployment in recent years. All in all, it tries to give an all-sided explanation to the reasons of European unemployment.