What goes up sometimes stays up: Shocks and Institutions as Determinants of Unemployment Persistence

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What goes up sometimes stays up: Shocks and Institutions as Determinants of Unemployment Persistence

Author Info

Gianni Amisano () (University of Brescia, Italy)
Massimiliano Serati () (Cattaneo University, Italy)

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Abstract

We analyse the determinants of unemployment persistence in four OECD countries byestimating a structural Bayesian VAR with an informative prior based on an insiders/outsiders model. We explicitly insert unemployment ben- efits and labour taxes so that our identification is not affected by the Faust and Leeper (1997) critique. We find widespread hysteresis: demand shocks play a dominant role in explaining unemployment also in the medium-run. Moreover real wages have low sensitivity to cyclical fluctuations and to labour market disequilibria. Our results emphasise the real power of the unions and their in- teractions with structural shocks and other institutions as crucial determinants of hysteresis.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 02-116/4.

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Date of creation: 18 Nov 2002
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Handle: RePEc:dgr:uvatin:20020116

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Article
- Gianni Amisano & Massimiliano Serati, 2003. "What goes up sometimes stays up: shocks and institutions as determinants of unemployment persistence," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 440-470, 09. [Downloadable!] (restricted)
Paper
- Gianni Amisano & Massimiliano Serati, 2002. "What goes up sometimes stays up: shocks and institutions as determinants of unemployment persistence," LIUC Papers in Economics 111, Cattaneo University (LIUC). [Downloadable!]

Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

This paper has been announced in the following NEP Reports:

NEP-ALL-2002-12-17 (All new papers)

Cited by:
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Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584_v1, HAL. [Downloadable!]
Massimiliano Serati & Michela Martinoia, 2008. "The East-West migration in Europe: skill levels of migrants and their effects on the european labour market," LIUC Papers in Economics 208, Cattaneo University (LIUC). [Downloadable!]
Monastiriotis, Vassilis, 2006. "Macro-determinants of UK regional unemployment and the role of employment flexibility," MPRA Paper 44, University Library of Munich, Germany. [Downloadable!]
Annika Alexius & Bertil Holmlund, 2007. "Monetary Policy and Swedish Unemployment Fluctuations," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Other versions:
- Annika Alexius & Bertil Holmlund, 2007. "Monetary Policy and Swedish Unemployment Fluctuations," IZA Discussion Papers 2933, Institute for the Study of Labor (IZA). [Downloadable!]
- Alexius, Annika & Holmlund, Bertil, 2007. "Monetary Policy and Swedish Unemployment Fluctuations," Working Paper Series 2007:17, Uppsala University, Department of Economics. [Downloadable!]
- Alexius, Annika & Holmlund, Bertil, 2007. "Monetary Policy and Swedish Unemployment Fluctuations," Economics Discussion Papers 2007-34, Kiel Institute for the World Economy. [Downloadable!]
- Annika Alexius & Bertil Holmlund, 2007. "Monetary Policy and Swedish Unemployment Fluctuations," Kiel Working Papers 1329, Kiel Institute for the World Economy. [Downloadable!]
- Alexius, Annika & Holmlund, Bertil, 2008. "Monetary policy and Swedish unemployment fluctuations," Working Paper Series 2008:5, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
- Holmlund, Bertil & Alexius, Annika, 2008. "Monetary Policy and Swedish Unemployment Fluctuations," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 2(4), pages 1-25. [Downloadable!]
BATTISTI,Michele, 2006. "Assessing persistence in the Italian rate of unemployment in presence of structural breaks and regional asymmetries, 1977 to 2004," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(3). [Downloadable!] (restricted)

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