## Unemployment in Greece: A Survey of the Issues

_IMF Working Papers, August 1, 1996_

## Source details

**Canonical URL:** [Unemployment in Greece: A Survey of the Issues](https://www.imf.org/en/publications/wp/issues/2016/12/30/unemployment-in-greece-a-survey-of-the-issues-2062)

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## Bibliographic details
- Authors: Dimitri G Demekas, Zenon Kontolemis
- Published: August 1, 1996
- Series: IMF Working Papers

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### Summary
- The Greek unemployment rate rose from 2 percent in the 1960s to 9-10 percent in the 1990s.
- Factors cited for the rise in unemployment:
  - increase in female participation rates
  - slowdown in growth
  - restructuring of production
  - increased mismatch between jobs and job seekers
- The paper identifies the most crucial factor as the persistence of real wage aspirations.
- The authors develop and test a model attributing persistent unemployment to:
  - rapid expansion in the number of easy, life-time government jobs
  - increase in the public/private wage differential during the 1980s

### Key Findings and Evidence
- Historical unemployment trajectory:
  - 2 percent in the 1960s
  - 9-10 percent in the 1990s
- Structural and labor-market contributors include:
  - female labor force participation increases
  - sectoral restructuring of production
  - mismatch between labor demand and supply
- Behavioral and institutional contributors emphasized:
  - persistence of real wage aspirations
  - labor market incentives from government employment and wage differentials

### Model and Analytical Approach
- The paper develops and tests a model linking unemployment persistence to:
  - expansion of easy, life-time government jobs
  - widening public/private wage differential in the 1980s
- Conceptual mechanisms referenced in keywords and subject areas:
  - demand shock, efficiency wage, employment equations
  - inflation-unemployment curve / Phillips curve / inflation-unemployment locus
  - unemployment-vacancy relationship, involuntary unemployment
  - severance pay implications, private sector vs public sector dynamics

### Policy-Relevant Implications (as implied by analysis)
- Reducing unemployment persistence may require addressing:
  - incentives created by easy, life-time government jobs
  - the public/private wage differential that widened during the 1980s
  - mismatches between job seekers and available jobs through retraining or reallocation policies
  - growth slowdowns that limit labor demand
- Labor force participation dynamics, notably female participation increases, should be considered in policy design

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/unemployment-in-greece-a-survey-of-the-issues-2062_