Cooperation between European Governments and the IMF: Conditionality Impact on Employment within the EU
Cooperation between European Governments and the IMF: Conditionality Impact on Employment within the EU

Summary/Abstract: Conditional lending by the International Monetary Fund (IMF) is a main anxiety causing issue when national governments turn elsewhere for financial assistance. As it is wellknown, the IMF’s austerity measures have had negative effects on some social and economic aspects. At the same time, one of the most important social issues is assumed to be job security, given that the employment rate has a notable influence both on GDP and on local market competitiveness. Hence, this paper aims to identify the relevant impact of and aspects related to the IMF measures proposed to the EU Member-States and their sway on the employment rate. The cross-country fixed effects panel data estimation approach has been employed to assess the effects of attached conditionality on employment between 2001 and 2012. In addition, the research process investigates the IMF program’s sway on youth employment. The findings are based on about 200 observations and argue that participation in IMF programs has increased economic growth both on total and youth employment; however, budget deficit sway on youth employment was more noticeable in nonprogram countries. The research results are robust enough and may be useful for both EU governments and the representatives of the IMF, as they highlight the effectiveness of conditional lending specificallyon employment in observed states.

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