IDEAS home Printed from https://ideas.repec.org/a/rnd/arjebs/v10y2018i5p167-178.html
   My bibliography  Save this article

On the Unemployment Output Relation in South Africa: A Non-Linear ARDL Approach

Author

Listed:
  • Brian Tavonga Mazorodze
  • Noureen Siddiq

Abstract

The central aim of this paper is to establish the asymmetric effects of cyclical output on South Africa's unemployment rate. To achieve this objective, the non-linear autoregressive distributed lag model (NARDL) is applied on quarterly data spanning the periods 1994Q1-2017Q4. For every 10% economic contraction and expansion respectively according to the results, the response of the labour market is asymmetric in the long-run in that it loses more workers during contraction (10.3%) than it employs during recoveries (8%) supporting the labour market hysteresis. This is particularly true post the 2009 Global crisis suggesting that firms might have become more risk-averse to short-lived recoveries in recent years. The weak response of the labour market during expansions supports IMF’s recent proposition that economic recovery alone may not be enough to address South Africa's unemployment problem.

Suggested Citation

  • Brian Tavonga Mazorodze & Noureen Siddiq, 2018. "On the Unemployment Output Relation in South Africa: A Non-Linear ARDL Approach," Journal of Economics and Behavioral Studies, AMH International, vol. 10(5), pages 167-178.
  • Handle: RePEc:rnd:arjebs:v:10:y:2018:i:5:p:167-178
    DOI: 10.22610/jebs.v10i5.2506.g1718
    as

    Download full text from publisher

    File URL: https://ojs.amhinternational.com/index.php/jebs/article/view/2506/1718
    Download Restriction: no

    File URL: https://ojs.amhinternational.com/index.php/jebs/article/view/2506
    Download Restriction: no

    References listed on IDEAS

    as
    1. Emrah Ismail Cevik & Sel Dibooglu & Salih Barişik, 2013. "Asymmetry in the Unemployment–Output Relationship Over the Business Cycle: Evidence from Transition Economies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 55(4), pages 557-581, December.
    2. Guilherme Alexandre Tombolo & Marcos Minoru Hasegawa, 2014. "Okun’s Law: Evidence for the Brazilian Economy," Economic Research Guardian, Weissberg Publishing, vol. 4(1), pages 2-12, June.
    3. Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
    4. Acemoglu, Daron & Scott, Andrew, 1994. "Asymmetries in the Cyclical Behaviour of UK Labour Markets," Economic Journal, Royal Economic Society, vol. 104(427), pages 1303-1323, November.
    5. Marina Marinkov & Jean‐pierre Geldenhuys, 2007. "Cyclical Unemployment And Cyclical Output: An Estimation Of Okun'S Coefficient For South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 75(3), pages 373-390, September.
    6. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
    7. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    8. 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.
    9. Lee, Jim, 2000. "The Robustness of Okun's Law: Evidence from OECD Countries," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 331-356, April.
    10. Andrew Phiri, 2014. "Nonlinear Co-Integration Between Unemployment and Economic Growth in South Africa," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 12(4 (Winter), pages 303-324.
    11. Philip M. Bodman, 1998. "Asymmetry and Duration Dependence in Australian GDP and Unemployment," The Economic Record, The Economic Society of Australia, vol. 74(227), pages 399-411, December.
    12. Moosa, Imad A., 1999. "Cyclical output, cyclical unemployment, and Okun's coefficient A structural time series approach," International Review of Economics & Finance, Elsevier, vol. 8(3), pages 293-304, September.
    13. Weber, Christian E, 1995. "Cyclical Output, Cyclical Unemployment, and Okun's Coefficient: A New Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 433-445, Oct.-Dec..
    14. Mah, Jai S., 2000. "An empirical examination of the disaggregated import demand of Korea--the case of information technology products," Journal of Asian Economics, Elsevier, vol. 11(2), pages 237-244.
    15. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    16. Paresh Kumar Narayan & Russell Smyth, 2004. "Crime rates, male youth unemployment and real income in Australia: evidence from Granger causality tests," Applied Economics, Taylor & Francis Journals, vol. 36(18), pages 2079-2095.
    17. Charalambos Pattichis, 1999. "Price and income elasticities of disaggregated import demand: results from UECMs and an application," Applied Economics, Taylor & Francis Journals, vol. 31(9), pages 1061-1071.
    18. Holmes, Mark J. & Silverstone, Brian, 2006. "Okun's law, asymmetries and jobless recoveries in the United States: A Markov-switching approach," Economics Letters, Elsevier, vol. 92(2), pages 293-299, August.
    19. Villaverde, José & Maza, Adolfo, 2009. "The robustness of Okun's law in Spain, 1980-2004: Regional evidence," Journal of Policy Modeling, Elsevier, vol. 31(2), pages 289-297.
    20. Kimberly Beaton, 2010. "Time Variation in Okun's Law: A Canada and U.S. Comparison," Staff Working Papers 10-7, Bank of Canada.
    Full references (including those not matched with items on IDEAS)

    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:rnd:arjebs:v:10:y:2018:i:5:p:167-178. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Muhammad Tayyab). General contact details of provider: https://ojs.amhinternational.com/index.php/jebs .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.