The Slowdown of Accumulation and the Rise of European Unemployment

Abstract

The paper aims at testing empirically two Keynesian hypotheses. First that increasing financial investment is one of the major causes for the slowdown in capital accumulation and, second, that this slowdown is one of major factors for rising unemployment rates. After presenting evidence from the National Accounts for the rising importance of dividend and interest income, econometric tests are performed for Germany, France, UK and the USA, and for the employment regressions, additionally for Italy. The choice of countries being determined by the interest in European unemployment and limited data availability. Overall, the findings are supportive of both hypotheses.European Unemployment; Keynesian theory; capital accumulation