Modeling time series of unemployment rates in the Caribbean basin

In the Caribbean Basin countries as in many other parts of the world, unemployment has become since the early 1980s one of the major dimensions of economic dysfunctions affecting societies. With levels that are above 15% and often reaching values of up to 20% or 30% during the decades 1980, 1990 and 2000, unemployment rates have increased rapidly and then holding at levels high over the past thirty years. This article offers an overview of the phenomenon of high and persistent unemployment in countries of the Caribbean. At first it highlights the specific characteristics of unemployment Caribbean with respect to that observed in other industrialized and developing nations. In a second step, it summarizes the main ideas that have been proposed to explain the problem of unemployment hysteresis and discusses their appropriateness in the case of countries considered. In a third time, it provides an empirical examination of the hypothesis of hysteresis including the framework of threshold models and processes with nonlinearities in the mean. Non-linear model : Regime-Switching ModelsEmpirical results on Unemployment persistence in the Caribbean Estimation of Regime-Switching Models for unemployment rates for Caribbean countries