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On the persistence of Spanish unemployment rates

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  • Diego Romero-Ávila

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  • Carlos Usabiaga

Abstract

This paper tests the hysteresis hypothesis for the unemployment rate of the Spanish regions over the period 1976–2004. For that purpose, we employ a large battery of recently developed panel tests which explicitly control for cross-sectional correlation in addition to the panel stationarity test of Carrión-i-Silvestre et al. (Econom J 8:159–175, 2005) which allows for multiple structural breaks and cross-sectional dependence. Overall, our confirmatory analysis with three different proxies for the excess of labour supply renders strong support for the hysteresis hypothesis in regional Spanish unemployment. The results are robust across panel techniques and datasets and accord well with the common belief among scholars that attaches a high degree of persistence to Spanish unemployment due to labour market malfunctioning. We provide a detailed description of the clusters of breaks identified in the analysis, which appear to be closely associated with some macroeconomic shocks and institutional arrangements. Copyright Springer-Verlag 2008

Suggested Citation

  • Diego Romero-Ávila & Carlos Usabiaga, 2008. "On the persistence of Spanish unemployment rates," Empirical Economics, Springer, vol. 35(1), pages 77-99, August.
  • Handle: RePEc:spr:empeco:v:35:y:2008:i:1:p:77-99
    DOI: 10.1007/s00181-007-0144-3
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    References listed on IDEAS

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    Cited by:

    1. Giray GOZGOR, 2013. "Unemployment Persistence and Inflation Convergence: Evidence from Regions of Turkey," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 13(1), pages 55-64.
    2. repec:wsi:serxxx:v:62:y:2017:i:05:n:s021759081550085x is not listed on IDEAS
    3. Ghoshray, Atanu & Ordóñez, Javier & Sala, Hector, 2016. "Euro, crisis and unemployment: Youth patterns, youth policies?," Economic Modelling, Elsevier, vol. 58(C), pages 442-453.
    4. Cuéllar Martín, Jaime & Martín-Román, Ángel L. & Moral, Alfonso, 2017. "A composed error model decomposition and spatial analysis of local unemployment," MPRA Paper 79783, University Library of Munich, Germany.
    5. Cuéllar-Martín, Jaime & Martín-Román, Ángel L. & Moral, Alfonso, 2017. "Natural and cyclical unemployment: a stochastic frontier decomposition and economic policy implications," MPRA Paper 76503, University Library of Munich, Germany.
    6. Carlos Usabiaga & Diego Romero-Ávila, 2012. "New Disaggregate Evidence on Spanish Inflation Persistence," EcoMod2012 3800, EcoMod.
    7. Diego Romero-Ávila & Carlos Usabiaga, 2012. "Disaggregate evidence on Spanish inflation persistence," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 3029-3046, August.
    8. DO ANGO, Simplicio & AMBA OYON, Claude Marius, 2016. "A PANIC Attack on Inflation and Unemployment in Africa: Analysis of Persistence and Convergence," MPRA Paper 79685, University Library of Munich, Germany.
    9. García-Cintado, Alejandro & Romero-Ávila, Diego & Usabiaga, Carlos, 2015. "Can the hysteresis hypothesis in Spanish regional unemployment be beaten? New evidence from unit root tests with breaks," Economic Modelling, Elsevier, vol. 47(C), pages 244-252.

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