IDEAS home Printed from https://ideas.repec.org/a/bla/ecorec/v68y1992i1p57-64.html
   My bibliography  Save this article

Insider Power as a Source of Hysteresis in Unemployment: Tests with Australian Data

Author

Listed:
  • NICOLAAS GROENEWOLD
  • LEANNE TAYLOR

Abstract

This paper reports the results of an empirical investigation of hysteresis in the unemployment rate using Australian data for 1966(3)‐1988(4). It is found that there is not hysteresis in the strict sense of the irrelevance of the natural unemployment rate although there is strong evidence of insider power in the wage‐fixing process. There is no evidence that the Accord changed the extent of the influence of insider power on wage setting.

Suggested Citation

  • Nicolaas Groenewold & Leanne Taylor, 1992. "Insider Power as a Source of Hysteresis in Unemployment: Tests with Australian Data," The Economic Record, The Economic Society of Australia, vol. 68(1), pages 57-64, March.
    • Handle: RePEc:bla:ecorec:v:68:y:1992:i:1:p:57-64
    DOI: 10.1111/j.1475-4932.1992.tb01749.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1475-4932.1992.tb01749.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1475-4932.1992.tb01749.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Mitchell, William F, 1987. "The Nairu, Structural Imbalance and the Macroequilibrium Unemployment Rate," Australian Economic Papers, Wiley Blackwell, vol. 26(48), pages 101-118, June.
    2. Chapman BJ. & Gruen F., 1990. "Analysis of the Australian consensual incomes policy: the prices and incomes accord," ILO Working Papers 992754563402676, International Labour Organization.
    3. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    4. Mark Wooden, 1990. "Corporatism And Wage Setting: The Accord In Hindsight," Economic Papers, The Economic Society of Australia, vol. 9(2), pages 51-63, June.
    5. John Y. Campbell & N. Gregory Mankiw, 1987. "Are Output Fluctuations Transitory?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(4), pages 857-880.
    6. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90, National Bureau of Economic Research, Inc.
    7. Dawkins, Peter & Wooden, Mark, 1985. "Labour Utilization and Wage Inflation in Australia: An Empirical Examination," The Economic Record, The Economic Society of Australia, vol. 61(173), pages 516-521, June.
    8. Alogoskoufis, George & Manning, Alan, 1988. "Wage setting and unemployment persistence in Europe, Japan and the USA," European Economic Review, Elsevier, vol. 32(2-3), pages 698-706, March.
    9. Lindbeck, Assar & Snower, Dennis J, 1988. "Cooperation, Harassment, and Involuntary Unemployment: An Insider-Outsider Approach," American Economic Review, American Economic Association, vol. 78(1), pages 167-188, March.
    10. Watts, M.J. & Mitchell, W.F., 1988. "Australian Wage Inflation: Real Wage Resistance, Hysteresis And Income Policy: 1968-1987," Papers 88-03, Flinders of South Australia - Discipline of Economics.
    11. Peter Dawkins & Mark Wooden, 1985. "Labour Utilization and Wage Inflation in Australia: An Empirical Examination," The Economic Record, The Economic Society of Australia, vol. 61(2), pages 516-521, June.
    12. Chapman, B.J. & Gruen, F., 1990. "An Analysis Of The Australian Consensual Incomes Policy: The Prices And Incomes Accord," CEPR Discussion Papers 221, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    13. Blanchard, Olivier J. & Summers, Lawrence H., 1987. "Hysteresis in unemployment," European Economic Review, Elsevier, vol. 31(1-2), pages 288-295.
    14. Watts, Martin J & Mitchell, William F, 1990. "Australian Wage Inflation: Real Wage Resistance, Hysteresis and Incomes Policy: 1968(3)-1988(3)," The Manchester School of Economic & Social Studies, University of Manchester, vol. 58(2), pages 142-164, June.
    15. Lindbeck, Assar & Snower, Dennis J., 1987. "Union activity, unemployment persistence and wage-employment ratchets," European Economic Review, Elsevier, vol. 31(1-2), pages 157-167.
    16. repec:ilo:ilowps:275456 is not listed on IDEAS
    17. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lee, Chien-Chiang & Chang, Chun-Ping, 2008. "Unemployment hysteresis in OECD countries: Centurial time series evidence with structural breaks," Economic Modelling, Elsevier, vol. 25(2), pages 312-325, March.
    2. Tolga Omay & Muhammad Shahbaz & Chris Stewart, 2021. "Is there really hysteresis in the OECD unemployment rates? New evidence using a Fourier panel unit root test," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(4), pages 875-901, November.
    3. Omay, Tolga & Shahbaz, Muhammad & Stewart, Chris, 2021. "Is There Really Hysteresis in OECD Countries’ Unemployment Rates? New Evidence Using a Fourier Panel Unit Root Test," MPRA Paper 107691, University Library of Munich, Germany, revised 10 May 2021.
    4. Zarina Oflaz, 2017. "Structural Break, Nonlinearity and the Hysteresis hypothesis: Evidence from new unit root tests," Econometrics Letters, Bilimsel Mektuplar Organizasyonu (Scientific letters), vol. 4(2), pages 1-16.
    5. T. D. Stanley, 2004. "Does unemployment hysteresis falsify the natural rate hypothesis? a meta‐regression analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 18(4), pages 589-612, September.
    6. Elizabeth Webster, 1999. "Macroeconomic Evaluations of Labour Market Programs," The Economic and Labour Relations Review, , vol. 10(1), pages 107-125, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giorgio Canarella & Rangan Gupta & Stephen M. Miller & Stephen K. Pollard, 2019. "Unemployment rate hysteresis and the great recession: exploring the metropolitan evidence," Empirical Economics, Springer, vol. 56(1), pages 61-79, January.
    2. Jeff Borland & Ian McDonald, 2000. "Labour Market Models of Unemployment in Australia," Melbourne Institute Working Paper Series wp2000n15, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    3. Ambler, Steven & Cardia, Emanuela & Phaneuf, Louis, 1992. "Contrats de salaire, croissance endogène et fluctuations," L'Actualité Economique, Société Canadienne de Science Economique, vol. 68(1), pages 175-204, mars et j.
    4. Dinand Webbink & Pierre Koning & Sunčica Vujić & Nicholas G. Martin, 2013. "Why Are Criminals Less Educated than Non-Criminals? Evidence from a Cohort of Young Australian Twins," Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(1), pages 115-144, February.
    5. Kai-Uwe Kuuhn & A. Jorge Padilla, 2002. "Union Power, Replacement and Labour Market Dynamics," Economic Journal, Royal Economic Society, vol. 112(479), pages 317-343, April.
    6. Holzer, Harry J & Montgomery, Edward B, 1993. "Asymmetries and Rigidities in Wage Adjustments by Firms," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 397-408, August.
    7. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-673, September.
    8. Mohan, Ramesh & Kemegue, Francis & Sjuib, Fahlino, 2007. "Hysteresis in Unemployment: Panel Unit Roots Tests Using State Level Data," MPRA Paper 5580, University Library of Munich, Germany.
    9. Chang‐Jin Kim & James Morley & Jeremy Piger, 2005. "Nonlinearity and the permanent effects of recessions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(2), pages 291-309.
    10. Dutt, Amitava K. & Ros, Jaime, 2007. "Aggregate demand shocks and economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 18(1), pages 75-99, March.
    11. Andini, Corrado & Andini, Monica, 2015. "A Note on Unemployment Persistence and Quantile Parameter Heterogeneity," IZA Discussion Papers 8819, Institute of Labor Economics (IZA).
    12. Guglielmo Maria Caporale & Luis Gil-Alana, 2002. "Unemployment and input prices: a fractional cointegration approach," Applied Economics Letters, Taylor & Francis Journals, vol. 9(6), pages 347-351.
    13. Alessandra Spremolla, 2001. "Persistencia en el Desempleo de Uruguay," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 38(113), pages 73-89.
    14. Dieu Nsenga & Mirada Nach & Hlalefang Khobai & Clement Moyo & Andrew Phiri, 2018. "Is it the natural rate or hysteresis hypothesis for unemployment in Newly Industrialized Economies?," Working Papers 1817, Department of Economics, Nelson Mandela University, revised Apr 2018.
    15. Gottfries, Nils & Westermark, Andreas, 1998. "Nominal wage contracts and the persistent effects of monetary policy," European Economic Review, Elsevier, vol. 42(2), pages 207-223, February.
    16. Sujit Kapadia, 2005. "Optimal Monetary Policy under Hysteresis," Economics Series Working Papers 250, University of Oxford, Department of Economics.
    17. Norman J. Morin & John M. Roberts, 1999. "Is hysteresis important for U.S. unemployment?," Finance and Economics Discussion Series 1999-56, Board of Governors of the Federal Reserve System (U.S.).
    18. Arestis, Philip & Biefang-Frisancho Mariscal, Iris, 1999. "Unit roots and structural breaks in OECD unemployment," Economics Letters, Elsevier, vol. 65(2), pages 149-156, November.
    19. Nsenga, Dieu & Nach, Mirada & Khobai, Hlalefang & Moyo, Clement & Phiri, Andrew, 2018. "Is it the natural rate or hysteresis hypothesis for unemployment rates in Newly Industrialized Economies?," MPRA Paper 86274, University Library of Munich, Germany.
    20. Antoine d'Autume, 1992. "Coïntégration et modèles dynamiques," Économie et Prévision, Programme National Persée, vol. 106(5), pages 71-83.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecorec:v:68:y:1992:i:1:p:57-64. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/esausea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.