Unemployment dynamics, and the propagation of aggregate and reallocation shocks using flow data for the Netherlands

This paper models the propagation at the macro level of four types of shocks using the SVAR approach. Time series data for the Netherlands on job creation, job destruction, the number of vacancies and labour supply are used to identify aggregate demand and supply shocks, and reallocation demand and supply shocks as different sources of unemployment dynamics. Each of these four types of shocks appears to have at least some influence on (changes) in unemployment both on the short and on the long run, although the long run influence of the aggregate labour supply shock is estimated to be very limited.