Labour mobility and labour market adjustment in the EU

Table 3 Variance decomposition: percentage of the variance of each variable explained by a country-specific labour demand shock

	Before EMU			After EMU
Years after the shock	Growth of relative real wages	Activity rate	Labour mobility	Growth of relative real wages	Activity rate	Labour mobility
1	0.3	12.6	6.0	1.1	8.4	7.6
3	0.5	27.7	6.0	5.2	15.2	18.9
5	0.9	36.9	6.0	5.7	18.3	21.1
10	1.2	44.0	6.1	5.8	19.8	21.6
15	1.3	45.2	6.2	5.8	19.8	21.6

Note: FEVDs are computed estimating a VAR on relative employment growth, relative growth of real wages, relative change in the working-age population and relative activity rate with four lags over the period 1970–2014
Source: own calculations