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<p>During the last decade, unemployment in Greece climbed up to 28%, almost quadrupling due to the economic crisis that hit Greece. In the present paper, we examine the determinants of the unemployment dynamics and the impact of the minimum wage on the probability of making a transition into and out of unemployment. We use micro-level data from the Greek Labour Force Survey (LFS) of the period 2004 to 2019 and control for several demographic factors, macro-economic conditions, regional differences, and changes in the statutory minimum wage. The results suggest that individual-level characteristics play an important role in making a transition into or out of unemployment. Changes in the real minimum wage are estimated to have either a statistically insignificant or a very small impact on unemployment entries and exits. Further, the impact of economy's growth rate follows the theoretical predictions as higher growth rates increase unemployment outflows and decrease inflows, while the regional differences are also important. Our findings persist even when we split the sample in three periods (pre-crisis, crisis, recovery). The results have important policy implications. Given that the disemployment effect of the minimum wage seems to be very limited in the Greek labor market, while the socioeconomic characteristics and regional characteristics play an important role, improving the skills of individuals through the educational system and reskilling or up-skilling programs while targeting specific regions may facilitate labor market mobility.</p>
</abstract>

During the last decade, unemployment in Greece climbed up to 28%, almost quadrupling due to the economic crisis that hit Greece. In the present paper, we examine the determinants of the unemployment dynamics and the impact of the minimum wage on the probability of making a transition into and out of unemployment. We use micro-level data from the Greek Labour Force Survey (LFS) of the period 2004 to 2019 and control for several demographic factors, macro-economic conditions, regional differences, and changes in the statutory minimum wage. The results suggest that individual-level characteristics play an important role in making a transition into or out of unemployment. Changes in the real minimum wage are estimated to have either a statistically insignificant or a very small impact on unemployment entries and exits. Further, the impact of economy's growth rate follows the theoretical predictions as higher growth rates increase unemployment outflows and decrease inflows, while the regional differences are also important. Our findings persist even when we split the sample in three periods (pre-crisis, crisis, recovery). The results have important policy implications. Given that the disemployment effect of the minimum wage seems to be very limited in the Greek labor market, while the socioeconomic characteristics and regional characteristics play an important role, improving the skills of individuals through the educational system and reskilling or up-skilling programs while targeting specific regions may facilitate labor market mobility.

Unemployment transitions and the role of minimum wage: From pre-crisis to crisis and recovery

Council of Economic Advisors and Athens University of Economics and Business

Department of International and European Economic Studies

Ministry of Labour and Social Affairs and Athens University of Economics and Business

IZA Journal of Labor Policy

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

During the last decade, unemployment in Greece climbed up to 28%, almost quadrupling due to the economic crisis that hit Greece. In the present paper, we...

Unemployment transitions and the role of minimum wage: From pre-crisis to crisis and recovery

Publié en ligne: 19 avr. 2022

Pages: -

Accepté: 18 oct. 2021

DOI: https://doi.org/10.2478/izajolp-2022-0002

Mots clés
minimum wage, unemployment transitions, labor mobility, Greek crisis

© 2022 Eirini Andriopoulou et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Unemployment transitions and the role of minimum wage: From pre-crisis to crisis and recovery

Publié en ligne: 19 avr. 2022

Pages: -

Accepté: 18 oct. 2021

DOI: https://doi.org/10.2478/izajolp-2022-0002

Mots clésminimum wage, unemployment transitions, labor mobility, Greek crisis

© 2022 Eirini Andriopoulou et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Mots clés
minimum wage, unemployment transitions, labor mobility, Greek crisis