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Unemployment persistence with an evolutionary perspective: job creation or destruction (or both)?

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  • De-Chih Liu

    (National Taipei University)

Abstract

This study analyzes the linkage between dynamic persistence of unemployment and the demand side of the labor market—job creation and destruction with an evolutionary perspective. The Neo-Austrian model predicts that: (i) unemployment is not featured as stationary over the entire sample period. (ii) unemployment is in disequilibria if job creation or job destruction (or both) is in out-of-equilibrium adjustment; (iii) regions with more unemployment compensation benefits or co-ordination problem are featured by higher unemployment persistence compared with low unemployment insurance benefits. The empirical analysis using aggregate-level and state-level data provides empirical support to these predictions. Using a unique dataset, this study finds that the persistence in the unemployment rate is a job destruction phenomenon.

Suggested Citation

  • De-Chih Liu, 2023. "Unemployment persistence with an evolutionary perspective: job creation or destruction (or both)?," Evolutionary and Institutional Economics Review, Springer, vol. 20(1), pages 83-109, April.
    • Handle: RePEc:spr:eaiere:v:20:y:2023:i:1:d:10.1007_s40844-022-00246-4
    DOI: 10.1007/s40844-022-00246-4
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    More about this item

    Keywords

    Unemployment; Hysteresis; Out-of-equilibrium dynamics; Job creation; Job destruction;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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