Crisis, adjustment and resilience in the Greek labour market: an unemployment decomposition approach

The crisis in Greece led to one of the largest economic shocks in European history, withunemployment increasing three-fold within the space of four years. Drawing on micro-datafrom the Greek Labour Force Survey, we utilise standard micro-econometric methods andnon-linear decomposition techniques to measure the size of the shock exerted on the Greeklabour market and the quantitative and price adjustments in response to this shock. We findelements of economic dynamism, with some sizeable price adjustments in the economy ofthe Greek capital, Athens; but overall our results show that adjustment has been partial andlimited, in terms of both labour quality (sorting, selection) and labour quantity (migration).Our use of the decomposition techniques for the analysis of macro-level developments in thelabour market offers a novel perspective to the application of the decompositionmethodology