The Impact of Economic and Financial Crises on Unemployment Rate in European Union

This paper aims at clustering the European Union member states into two groups of countries (country-groups with inclusive institutions / extractive institutions) and, depending on them, to assess the impact of financial shocks on unemployment during 2003-2017 period, given that the unemployment was the main channel by which the economic and financial crisis influenced the social developments in the European Union. In order to achieve the objective of the paper, I used panel Panel Estimated Generalized Least Squares method for both clusters, this being weighted by Period SUR option to remove ex-ante the possible inconveniences of the model. The quality of institutions wasn't used yet as a clustering criterion for unemployment assessments and this approach can bring a real value added in this research area. The results show that the institution quality are a relevant explanatory factor for economic and social development. This assessment also confirm the lower resilience of labour markets at the effects of the economic and financial crisis in the member states with extractive institutions.