Unemployment Dynamics in the Greek Crisis

Unemployment Dynamics in the Greek Crisis

This short empirical paper examines the unemployment dynamics in Greece both in the long run and during the current crisis.

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Since 2009 Greece is experiencing a major economic crisis. The most dramatic impact can be witnessed in the labour market where the unemployment rate from 7.7% in 2008 reached 17.7% in 2011 and 22.7% in the first five months of 2012.

This sharp unemployment increase is the obvious consequence of extreme fiscal contraction and deep recession. At the same period, a series of labour market reforms focusing on wage setting and employment protection have been introduced.

The present paper explores the underlying dynamics behind the unemployment boom presenting the evolution of the hiring, firing and quit rates for the period 2001 until May 2012. It employs a simple methodology that quantifies the contributions of the job finding and separation rate to the evolution of the unemployment rate. Finally it offers a preliminary evaluation of the reforms relaxing Employment Protection Legislation (EPL) 

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