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The Unemployment Invariant Hypothesis: Heterogenous Panel Cointegration Evidence From U.S. State Level Data

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  • Mercy Laita Palamuleni

    (Department of Accounting, Finance, and Economics, College of Business, McNeese State University, Lake Charles, Louisiana, USA)

Abstract

We explore the long-run relationship between the unemployment rate and the labor force participation rates for U.S. over the period of 1976-2015. We use U.S. state level data and panel cointegration techniques that are robust to cross-sectional heterogeneity, cross-sectional dependency, omitted variable bias and endogeniety issues. We find evidence that on average these two variables are cointegrated and are inversely related. Similar to studies that employ U.S. country level data, this study further questions the empirical relevance of the unemployment invariant hypothesis for the case of the U.S.

Suggested Citation

  • Mercy Laita Palamuleni, 2017. "The Unemployment Invariant Hypothesis: Heterogenous Panel Cointegration Evidence From U.S. State Level Data," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 414-419.
    • Handle: RePEc:eco:journ1:2017-01-53
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Unemployment Rate; Unemployment Invariant Hypothesis; Panel Cointegration;
    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
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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