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Hysteresis in Unemployment: Evidence from Norwegian Counties

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Author Info
Kåre Johansen () (Department of Economics, Norwegian University of Science and Technology)

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Abstract

The paper tests hysteresis effects in unemployment using aggregate and panel data for Norway. While tests using aggregate or county— specific time series do not reject the null of unit root hysteresis, the panel tests firmly reject the null. When a one—time structural break is incorporated, the unit root hypothesis is rejected (or nearly so) in most counties. All results reveal a high degree of unemployment persistence, but the speed of adjustment is much higher when we allow for a change in mean.

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File URL: http://www.svt.ntnu.no/iso/WP/2002/6hysterwp.pdf
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Publisher Info
Paper provided by Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 0602.

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Length: 25 pages
Date of creation:
Date of revision: 20 Aug 2002
Handle: RePEc:nst:samfok:0602

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Related research
Keywords: Hysteresis panel unit root tests structural break

Find related papers by JEL classification:
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  3. Banerjee, Anindya, 1999. " Panel Data Unit Roots and Cointegration: An Overview," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 607-29, Special I. [Downloadable!] (restricted)
  4. Saint-Paul, G., 1991. "The High Unemployment Trap," DELTA Working Papers 91-01, DELTA (Ecole normale supérieure).
    Other versions:
  5. David H. Papell & Christian J. Murray & Hala Ghiblawi, 2000. "The Structure of Unemployment," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 309-315, May. [Downloadable!] (restricted)
  6. Song, Frank M. & Wu, Yangru, 1998. "Hysteresis in unemployment: Evidence from OECD countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 38(2), pages 181-192. [Downloadable!] (restricted)
  7. Drazen, Allan, 1987. "Reciprocal externality models of low employment," European Economic Review, Elsevier, vol. 31(1-2), pages 436-443. [Downloadable!] (restricted)
  8. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-94, October. [Downloadable!] (restricted)
    Other versions:
  9. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," Working papers 427, Massachusetts Institute of Technology (MIT), Department of Economics.
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  10. Dyrstad, Jan Morten & Johansen, Kare, 2000. " Regional Wage Responses to Unemployment and Profitabililty: Empirical Evidence from Norwegian Manufacturing Industries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(1), pages 101-17, February. [Downloadable!] (restricted)
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  12. Nickell, Stephen, 1998. "Unemployment: Questions and Some Answers," Economic Journal, Royal Economic Society, vol. 108(448), pages 802-16, May. [Downloadable!] (restricted)
  13. Perron, Pierre & Vogelsang, Timothy J, 1992. "Nonstationarity and Level Shifts with an Application to Purchasing Power Parity," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(3), pages 301-20, July.
    Other versions:
  14. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I. [Downloadable!] (restricted)
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  16. Manning, Alan, 1990. "Imperfect Competition, Multiple Equilibria and Unemployment Policy," Economic Journal, Royal Economic Society, vol. 100(400), pages 151-62, Supplemen. [Downloadable!] (restricted)
  17. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
    Other versions:
  18. Mitchell, William F, 1993. "Testing for Unit Roots and Persistence in OECD Unemployment Rates," Applied Economics, Taylor and Francis Journals, vol. 25(12), pages 1489-1501, December.
  19. Barro, Robert J, 1988. "The Persistence of Unemployment," American Economic Review, American Economic Association, vol. 78(2), pages 32-37, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mariam Camarero & Josep Lluis Carrion Silvestre & Cecilio Tamarit, 2004. "Testing for hysteresis in unemployment in OECD countries. New evidence using stationarity panel tests with breaks," Working Papers in Economics 119, Universitat de Barcelona. Espai de Recerca en Economia. [Downloadable!]
    Other versions:
  2. Matteo Lanzafame, 2006. "The Nature of Regional Unemployment in Italy," ERSA conference papers ersa06p155, European Regional Science Association. [Downloadable!]
    Other versions:
  3. Mariam Camarero & Josep Lluís Carrion-i-Silvestre & Cecilio Tamarit, 2004. "Testing for hysteresis in unemployment in OECD countries. New evidence using stationarity panel tests with breaks†," Economic Working Papers at Centro de Estudios Andaluces 2004/40, Centro de Estudios Andaluces. [Downloadable!]
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