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On the Dynamics of Unemployment in a Developing Economy: Colombia

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  • Ana María Iregui

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  • Jesús Otero

Abstract

This paper estimates an asymmetric error correction model to analyse the dynamic behaviour of the Colombian unemployment rate. We find evidence that wages above their long- run equilibrium level do increase unemployment, but wages below this level do not reduce it.

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Paper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 208.

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Handle: RePEc:bdr:borrec:208

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Keywords: Unemployment; wage disequilibrium; labour market; cointegration; non-linearties; Colombia.;

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References

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  1. Pesaran,H.M. & Shin,Y., 1995. "Long-Run Structural Modelling," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 9419, Faculty of Economics, University of Cambridge.
  2. Luis Eduardo Arango & Carlos Esteban Posada, 2001. "Unemployment Rate And The Real Wage Behavior: A Neoclassical Hint For The Colombian Labor Market Adjustment," BORRADORES DE ECONOMIA 003736, BANCO DE LA REPÚBLICA.
  3. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, Econometric Society, vol. 49(4), pages 1057-72, June.
  4. Marcellino, Massimiliano & Mizon, Grayham E., 2000. "Modelling shifts in the wage-price and unemployment-inflation relationships in Italy, Poland and the UK," Economic Modelling, Elsevier, Elsevier, vol. 17(3), pages 387-413, August.
  5. Cook, Steven & Holly, Sean & Turner, Paul, 1999. "The power of tests for non-linearity: the case of Granger-Lee asymmetry," Economics Letters, Elsevier, Elsevier, vol. 62(2), pages 155-159, February.
  6. Granger, C W J & Lee, T H, 1989. "Investigation of Production, Sales and Inventory Relationships Using Multicointegration and Non-symmetric Error Correction Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 4(S), pages S145-59, Supplemen.
  7. Steven Cook & Sean Holly, 2002. "Threshold specification for asymmetric error correction models," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 9(11), pages 711-713.
  8. Cheung, Yin-Wong & Lai, Kon S, 1993. "Finite-Sample Sizes of Johansen's Likelihood Ration Tests for Conintegration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 55(3), pages 313-28, August.
  9. Eduardo Lora & Gustavo Márquez, 1998. "The Employment Problem in Latin America: Perceptions and Stylized Facts," IDB Publications 6437, Inter-American Development Bank.
  10. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 12(2-3), pages 231-254.
  11. Alvaro Escribano & Santiago Mira, 2001. "Nonlinear error correction models," Documentos de trabajo conjunto ULL-ULPGC, Facultad de Ciencias Económicas de la ULPGC 2001-03, Facultad de Ciencias Económicas de la ULPGC.
  12. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198774501, October.
  13. Escribano, Alvaro & Pfann, Gerard A., 1998. "Non-linear error correction, asymmetric adjustment and cointegration," Economic Modelling, Elsevier, Elsevier, vol. 15(2), pages 197-216, April.
  14. repec:fth:inadeb:371 is not listed on IDEAS
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Citations

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Cited by:
  1. Luis Eduardo Arango & Ana María Iregui & Luis Fernando Melo, . "Recent Behavior of Output, Unemployment, Wages and Prices in Colombia:What went Wrong?," Borradores de Economia 249, Banco de la Republica de Colombia.
  2. Magnus Gustavsson & Par Osterholm, 2006. "Hysteresis and non-linearities in unemployment rates," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(9), pages 545-548.
  3. Luis Eduardo Arango & Carlos Esteban Posada, 2006. "La Tasa De Desempleo De Largo Plazo En Colombia," BORRADORES DE ECONOMIA 003085, BANCO DE LA REPÚBLICA.
  4. Luis Eduardo Arango & Carlos Esteban Posada, 2006. "The Time-Varying Long-Run Unemployment Rate: The Case Colombian," BORRADORES DE ECONOMIA 003629, BANCO DE LA REPÚBLICA.
  5. José R. Gamarra, 2006. "¿Cómo se comportan las tasas de desempleo en siete ciudades colombianas?," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
  6. Luis Eduardo Arango & IREGUI, Ana María & MELO, Luis F., 2006. "Recent macroeconomic performance in colombia: what went wrong?," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
  7. Luis Eduardo Arango & Carlos Esteban Posada, . "The Time-Varying Long-Run Unemployment Rate: The Colombian Case," Borradores de Economia 389, Banco de la Republica de Colombia.

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