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Hysteresis Hypothesis in Job Creation and Destruction: Evidence from the U.S

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  • De-Chih Liu

    (Department of Industrial Economics, TamKang University)

Abstract

We employ the Im et al. (2005) and the Bai and Carrion-i-Silvestre (2009) tests of panel based unit root types to investigate the hysteresis hypothesis in job creation and destruction using U.S. state-level data. Although the conventional individual unit tests fail to reject the unit root for some of the states job creation and destruction rates, the results based on two panel-based unit root tests indicate that the hysteresis hypothesis in job creation and destruction can clearly be rejected. Our findings suggest that given sufficient time, the job creation and destruction rates will return to their previous paths.

Suggested Citation

  • De-Chih Liu, 2011. "Hysteresis Hypothesis in Job Creation and Destruction: Evidence from the U.S," Annals of Economics and Finance, Society for AEF, vol. 12(2), pages 389-409, November.
    • Handle: RePEc:cuf:journl:y:2011:v:12:i:2:p:389-409
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    More about this item

    Keywords

    Hysteresis hypothesis; Job creation; Job destruction;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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