Publication

This paper examines the long swings in OECD unemployment rates and identifies a common factor that drives unemployment beyond business cycles. The authors argue that this factor can be interpreted as a measure of global expected returns. They estimate a model of unemployment adjustment, which allows for the influence both of this global factor and of labor market institutions. The authors then examine whether the global factor can act as a proxy for the natural rate in a Philllips curve. They argue that the global factor is highly significant in explaining unemployment and inflation.