Page 44 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.78, # 1, 2021, pp. 40-65

The European employment report is one of the main tools to support this
macroeconomic indicator. The report says that the EU is experiencing strong
employment growth and this indicator has increased in all EU member States, and
overall employment growth has been the strongest since the launch of the Lisbon
strategy in 2000. In addition, job creation appears to be continuing apace. This is
very positive news, which shows that political efforts in the field of employment are
beginning to bear fruit in many member States. At the same time, we must not forget
that the ambitious Lisbon and Stockholm employment goals continue to pose a
serious challenge and leave no room for complacency. As in previous years, this
issue of employment in Europe addresses topics that are high on the agenda of the
European Union's employment policy, complementing and expanding on the topics
covered in previous reports. In particular, it aims to inform the broad political debate
on flexible security, which resulted in a message from the Commission on flexible
security earlier this year with the aim of reaching agreement on a set of common
principles at the European level in the near future. It also addresses the issue of
work-life balance and is complemented with a recent report from the youth
Commission, which focuses on youth employment [European Commission, 2007].

By examining the relationship between capital account openness and labor share of
national income [Jayadev A., 2007], the new financial openness index and the cross-
country labor share panel available in the UN system of National Accounts have
been modified to show a stable negative correlation between the degree of openness
and labor share. Although this effect is absent for low-income countries, a direct
negative relationship persists for all other subsamples and with different control
mechanisms. A plausible explanation is that openness changes the terms of
negotiations between labor and capital. By increasing the bargaining power of
capital in relation to labor, increased capital mobility increases the rent accumulated
in capital. Thus, the opening of the capital account can lead to a decrease in the
share of labor in the firm's income and, consequently, at the General economic level,
its share in national production.

After the appearance of Modigliani's famous article in 1944, which made one of the
most decisive contributions to the `neoclassical synthesis "of Keynesian theory, the
prevailing view among economists was that Keynesian unemployment could be
explained as a result of the main discrepancy between the supply of money and the
level of monetary wages. At first, following Modigliani's approach, a distinction was
made between the `base case", where unemployment was assumed to arise from the
aforementioned monetary disequilibrium, and the ` special case", where employment
was considered a determinable liquidity trap.

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