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Unemployment persistence: the case of Sweden

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  • Bengt Assarsson
  • Per Jansson

Abstract

An unobserved components time-series model is used to examine the persistence in Swedish unemployment. Three sources of unemployment persistence are identified: natural rate shocks; hysteresis; and persistent cycles. Hysteresis effects are modelled by allowing cyclical unemployment to have a lagged effect on the natural rate. The evidence suggests that the course of unemployment in Sweden has mainly been determined by natural rate shocks. This is especially the case for the large increase during the early 1990s, but also for the smaller changes between 1970 and the late 1980s. Hysteresis effects are also present but they are less important because of the relatively small cyclical changes.

Suggested Citation

  • Bengt Assarsson & Per Jansson, 1998. "Unemployment persistence: the case of Sweden," Applied Economics Letters, Taylor & Francis Journals, vol. 5(1), pages 25-29.
    • Handle: RePEc:taf:apeclt:v:5:y:1998:i:1:p:25-29
    DOI: 10.1080/758540121
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    References listed on IDEAS

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    Cited by:

    1. Marcus Mossfeldt & Par Osterholm, 2011. "The persistent labour-market effects of the financial crisis," Applied Economics Letters, Taylor & Francis Journals, vol. 18(7), pages 637-642.
    2. Engelbert Stockhammer & Rob Calvert Jump, 2022. "An Estimation of Unemployment Hysteresis," Working Papers PKWP2221, Post Keynesian Economics Society (PKES).
    3. Holmlund, Bertil, 2003. "The Rise and Fall of Swedish Unemployment," Working Paper Series 2003:13, Uppsala University, Department of Economics.
    4. Österholm, Pär, 2010. "Unemployment and labour-force participation in Sweden," Economics Letters, Elsevier, vol. 106(3), pages 205-208, March.
    5. Emilio Congregado & Antonio Golpe & Simon Parker, 2012. "The dynamics of entrepreneurship: hysteresis, business cycles and government policy," Empirical Economics, Springer, vol. 43(3), pages 1239-1261, December.
    6. Eriksson, Stefan & Gottfries, Nils, 2005. "Ranking of job applicants, on-the-job search, and persistent unemployment," Labour Economics, Elsevier, vol. 12(3), pages 407-428, June.
    7. Brinca Pedro, 2013. "Monetary business cycle accounting for Sweden," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 1-35, October.
    8. Congregado, Emilio & Golpe, Antonio A. & Carmona, Mónica, 2012. "Looking for hysteresis in coal consumption in the US," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(5), pages 3339-3343.
    9. Robert Calvert Jump & Engelbert Stockhammer, 2019. "Reconsidering the natural rate hypothesis," FMM Working Paper 45-2019, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    10. Magnus Gustavsson & Par Osterholm, 2006. "Hysteresis and non-linearities in unemployment rates," Applied Economics Letters, Taylor & Francis Journals, vol. 13(9), pages 545-548.

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