Main Drivers of Structural Unemployment in Times of Relative Prosperity

This paper analyzes the main determinants of structural unemployment. A discussion of the relative importance of structural unemployment in total unemployment is done using NAIRU estimates for a panel of OECD countries. Then, NAIRU estimates are regressed on economic, institutional and labour market structural mismatch factors, the latter modeled using the variability of unemployment rates by industry and occupation. The analysis focuses on the 1999-2008 period, characterized by relatively stable growth. Findings show that increases in unemployment rates variability by occupation are associated with a decrease in NAIRU, while increases in unemployment rates variability by industry have the opposite effect. Increases in institutional factors variables lead to higher NAIRU, while economic factors do not have a significant effect.