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A further investigation of unemployment persistence in European transition economies

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  • Cuestas, Juan C.
  • Gil-Alana, Luis A.
  • Staehr, Karsten

Abstract

This paper analyses the dynamics of the unemployment rate in the eight countries from Central and Eastern Europe which joined the EU in 2004. Unit root tests allowing for nonlinearities and structural changes suggest that the unemployment rate is not stationary in most of the sample countries. Tests allowing for fractional integration, however, reveal that shocks are highly persistent, implying a slow rate of convergence to the natural rate of unemployment. The unemployment rate is least persistent in Hungary and Slovenia, more persistent in the Czech Republic, Slovakia and the Baltic States and extremely persistent in Poland. The degree of persistence appears to reflect the different levels of economic and institutional development in the countries and possibly also the role of the government.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 39 (2011)
Issue (Month): 4 ()
Pages: 514-532

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Handle: RePEc:eee:jcecon:v:39:y:2011:i:4:p:514-532

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Web page: http://www.elsevier.com/locate/inca/622864

Related research

Keywords: Unemployment; NAIRU; Hysteresis; Unit roots; Fractional integration;

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References

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Cited by:
  1. Zuzanna Brzozowska, 2013. "Was falling fertility in the communist Poland driven by changes in women’s education?," Working Papers 54, Institute of Statistics and Demography, Warsaw School of Economics.
  2. Rob Ackrill and Simeon Coleman, 2012. "Inflation dynamics in central and eastern European countries," Working Papers 2012/01, Nottingham Trent University, Nottingham Business School, Economics Division.
  3. Giray Gozgor, 2013. "Testing Unemployment Persistence in Central and Eastern European Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 3(3), pages 694-700.
  4. Eamets, Raul, 2013. "Labour Market and Labour Market Policies During the Great Recession: The Case of Estonia," IZA Policy Papers 60, Institute for the Study of Labor (IZA).
  5. Anna Baranowska-Rataj & Iga Magda, 2013. "Decomposition of trends in youth unemployment – the role of job accessions and separations in countries with different employment protection regimes," Working Papers 53, Institute of Statistics and Demography, Warsaw School of Economics.
  6. Raul Eamets, 2013. "Labour market and labour market policies during great recession: the case of Estonia," IZA Journal of European Labor Studies, Springer, vol. 2(1), pages 1-25, December.

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