Unemployment analysis in the Med area

Unemployment in the MED area, together with other differences in income, is one of the principal causes of the migratory flow towards the UE. It is therefore fun- damental to investigate those elements that affect the labor market within the geographi- cal area of the MED. This paper examines the movements throughout the MED area and unemployment following two different perspectives. First, unemployment fluctuations are viewed as the outcome of the interplay between labor market shocks and prolonged lagged adjustment processes. Second, unemployment fluctuations are attributed largely to changes in the long-run equilibrium unemployment rate. To demonstrate this we present an empirical analysis on a number of countries within the MED area covering a period from 1999 to 2006. The analysis has consequences for the evaluation of labor market policies.