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Unemployment Invariance

Author

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  • Karanassou Marika

    (University of London,London, United Kingdom of Great Britain and Northern Ireland)

  • Snower Dennis J.

    (University of London,London, Germany)

Abstract

This paper provides a critique of the ‘unemployment invariance hypothesis’, according to which the behavior of the labor market, by itself, ensures that the long-run unemployment rate is independent of the size of the capital stock, productivity and the labor force. In the context of an endogenous growth model, we show that the labor market alone need not contain all the equilibrating mechanisms to ensure unemployment invariance; in particular, other markets may perform part of the equilibrating process as well. By implication, policies that raise the growth path of capital or increase the effective working-age population may influence the long-run unemployment rate.

Suggested Citation

  • Karanassou Marika & Snower Dennis J., 2004. "Unemployment Invariance," German Economic Review, De Gruyter, vol. 5(3), pages 297-317, August.
    • Handle: RePEc:bpj:germec:v:5:y:2004:i:3:p:297-317
    DOI: 10.1111/j.1465-6485.2004.00110.x
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    Citations

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    Cited by:

    1. Aysit Tansel & Zeynel Abidin Ozdemir, 2016. "Unemployment Invariance Hypothesis, Added and Discouraged Worker Effects in Canada?," ERC Working Papers 1717, ERC - Economic Research Center, Middle East Technical University, revised Dec 2017.
    2. Tansel, Aysit & Ozdemir, Zeynel Abidin & Aksoy, Emre, 2016. "Does Unemployment Invariance Hypothesis Hold for Canada?," MPRA Paper 72869, University Library of Munich, Germany.
    3. Roberto Bande & Marika Karanassou, 2009. "Labour market flexibility and regional unemployment rate dynamics: Spain 1980–1995," Papers in Regional Science, Wiley Blackwell, vol. 88(1), pages 181-207, March.
    4. Marika Karanassou & Hector Sala & Dennis Snower, 2007. "The macroeconomics of the labor market: three fundamental views," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 6(3), pages 151-180, December.
    5. Aysit Tansel & Zeynel Abidin Ozdemir & Emre Aksoy, 2016. "Unemployment and labour force participation in Turkey," Applied Economics Letters, Taylor & Francis Journals, vol. 23(3), pages 184-187, February.
    6. Marika Karanassou & Hector Sala & Dennis J. Snower, 2008. "The Evolution Of Inflation And Unemployment: Explaining The Roaring Nineties," Australian Economic Papers, Wiley Blackwell, vol. 47(4), pages 334-354, December.
    7. Makoto Kakinaka & Hiroaki Miyamoto, 2012. "Unemployment and labour force participation in Japan," Applied Economics Letters, Taylor & Francis Journals, vol. 19(11), pages 1039-1043, July.
    8. Nicholas Apergis & Ibrahim Arisoy, 2017. "Unemployment and labor force participation across the US States: new evidence from panel data," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 67(4), pages 45-84, October-D.
    9. Roberto Bande & Marika Karanassou, 2011. "The NRU and the Evolution of Regional Disparities in Spanish Unemployment," Documentos de trabajo - Analise Economica 0043, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
    10. Emerson, Jamie, 2011. "Unemployment and labor force participation in the United States," Economics Letters, Elsevier, vol. 111(3), pages 203-206, June.
    11. Driver, Ciaran & Muñoz-Bugarin, Jair, 2010. "Capital investment and unemployment in Europe: Neutrality or not?," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 492-496, March.
    12. Aysit Tansel & Zeynel Abidin Ozdemir & Emre Aksoy, 2016. "Unemployment and labour force participation in Turkey," Applied Economics Letters, Taylor & Francis Journals, vol. 23(3), pages 184-187, February.
    13. Marika Karanassou & Hector Sala & Dennis J. Snower, 2010. "Phillips Curves And Unemployment Dynamics: A Critique And A Holistic Perspective," Journal of Economic Surveys, Wiley Blackwell, vol. 24(1), pages 1-51, February.
    14. Marika Karanassou & Hector Sala, 2010. "Labour Market Dynamics in Australia: What Drives Unemployment?," The Economic Record, The Economic Society of Australia, vol. 86(273), pages 185-209, June.
    15. Roberto Bande & Marika Karanassou, 2014. "Spanish Regional Unemployment Revisited: The Role of Capital Accumulation," Regional Studies, Taylor & Francis Journals, vol. 48(11), pages 1863-1883, November.
    16. Ibrahim Arisoy, 2018. "An Empirical Examination of Unemployment Invariance Hypothesis, Discouraged and Added Worker Effects in Turkey," International Journal of Economics and Financial Issues, Econjournals, vol. 8(6), pages 11-14.
    17. Österholm, Pär, 2010. "Unemployment and labour-force participation in Sweden," Economics Letters, Elsevier, vol. 106(3), pages 205-208, March.
    18. Liu, De-Chih, 2014. "The link between unemployment and labor force participation rates in Japan: A regional perspective," Japan and the World Economy, Elsevier, vol. 30(C), pages 52-58.
    19. Karanassou, Marika & Sala, Hector, 2008. "The Rise and Fall of Spanish Unemployment: A Chain Reaction Theory Perspective," IZA Discussion Papers 3712, Institute of Labor Economics (IZA).
    20. Philip Arestis & Michelle Baddeley & Malcolm Sawyer, 2007. "The Relationship Between Capital Stock, Unemployment And Wages In Nine Emu Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 59(2), pages 125-148, April.
    21. Roberto Bande & Marika Karanassou, 2009. "Labour market flexibility and regional unemployment rate dynamics: Spain 1980–1995," Papers in Regional Science, Wiley Blackwell, vol. 88(1), pages 181-207, March.
    22. Marwa Sahnoun & Chokri Abdennadher, 2018. "The assessment of active labor market policies: evidence from OECD countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 257-283, August.
    23. Aysit Tansel & Zeynel Abidin Ozdemir & Emre Aksoy, 2016. "Does Unemployment Invariance Hypothesis Hold for Canada?," Working Papers 2016/3, Turkish Economic Association.
    24. Martin Leites & Sylvina Porras, 2013. "El enfoque de la Reacción en Cadena: una aplicación para explicar la dinámica del desempleo en Uruguay," Documentos de Trabajo (working papers) 13-11, Instituto de Economía - IECON.
    25. Marika Karanassou & Hector Sala & Dennis Snower, 2007. "The macroeconomics of the labor market: three fundamental views," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 6(3), pages 151-180, December.

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