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Coping with deindustrialization: A panel study for early OECD countries

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  • Teimouri, Sheida
  • Zietz, Joachim

Abstract

The paper provides new evidence on policy options to deal with the impact of deindustrialization, as defined in terms of a drop in manufacturing employment, for a panel of 20 early OECD countries on annual data from 1990 to 2014. We explore how key economic indicators, among them per capita GDP growth and various unemployment rates, have responded to deindustrialization. Our main contribution is to explore the role of economic flexibility and some key labor market interventions in shaping the impact of deindustrialization on these indicators. We find that lowering the cost to start a new business is a particularly useful policy to combat rising unemployment and losses in GDP growth in this context. But we also show that economic flexibility alone is not sufficient to achieve good macroeconomic outcomes. Job market training in conjunction with flexibility appears to be the preferred policy choice.

Suggested Citation

  • Teimouri, Sheida & Zietz, Joachim, 2020. "Coping with deindustrialization: A panel study for early OECD countries," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 26-41.
    • Handle: RePEc:eee:streco:v:54:y:2020:i:c:p:26-41
    DOI: 10.1016/j.strueco.2020.04.006
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    More about this item

    Keywords

    Deindustrialization; Manufacturing employment; Economic flexibility; Labor market flexibility; Job training;
    All these keywords.

    JEL classification:

    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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