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Persistence in U.S. State Unemployment Rates

Author

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  • Peter S. Sephton

    () (School of Business, Queen’s University, 143 Union Street, Kingston, ON Canada K7L 3N6)

Abstract

Romero-A´ vila and Usabiaga (2007) find that many U.S. state unemployment rates are stationary, a result at odds with the traditional view that unemployment rates are pathdependent and subject to shocks that have permanent effects. They base their results on multivariate unit root tests that provide for two breaks in mean. This note extends the analysis to directly examine whether the series were fractionally integrated. When no allowance is made for breaking means, the results suggest evidence in favor of hysteresis, an outcome that generally applies when one break in mean is considered. Allowing for two breaks demonstrates that the evidence in favor of the natural rate and the hysteresis hypotheses is temporally sensitive.

Suggested Citation

  • Peter S. Sephton, 2009. "Persistence in U.S. State Unemployment Rates," Southern Economic Journal, Southern Economic Association, vol. 76(2), pages 458-466, October.
  • Handle: RePEc:sej:ancoec:v:76:2:y:2009:p:458-466
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    File URL: http://dx.doi.org/10.4284/sej.2009.76.2.458
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    Citations

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    Cited by:

    1. 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.
    2. Fumitaka Furuoka, 2015. "Unemployment Hysteresis in the “Nordic Kitten”: Evidence from Five Estonian Regions," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(5), pages 631-642, December.
    3. Mark D. Partridge & Dan S. Rickman & M. Rose Olfert & Ying Tan, 2015. "When Spatial Equilibrium Fails: Is Place-Based Policy Second Best?," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1303-1325, August.
    4. Andini, Corrado & Andini, Monica, 2015. "A Note on Unemployment Persistence and Quantile Parameter Heterogeneity," IZA Discussion Papers 8819, Institute for the Study of Labor (IZA).
    5. Martin Boďa & Petra Medveďová & Mariana Považanová, 2015. "(A)symetria v Okunovom zákone v štátoch Vyšehradskej skupiny
      [(A)symmetry in Okun’s Law in the Visegrad Group Countries]
      ," Politická ekonomie, University of Economics, Prague, vol. 2015(6), pages 741-758.

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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