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Unemployment in the OECD: Models and Mysteries

  • Junankar, Pramod N. (Raja)


    (University of New South Wales)

  • Madsen, Jakob B.


    (University of Copenhagen)

This paper compares models used to explain OECD unemployment. The models suggest that the "natural rate of unemployment" has been driven up mainly by wage push factors. Panel data on twenty-two OECD countries are used to investigate the explanatory power of these models over the past two decades. Our estimates reveal that coefficients on key variables often turn out with signs which are at odds with the theories or are insignificant and that a second order autoregressive model performs nearly as well as all the other models. The conclusion offers some directions for future research.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1168.

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Length: 44 pages
Date of creation: Jun 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1168
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  19. Bean, C R & Layard, P R G & Nickell, S J, 1986. "The Rise in Unemployment: A Multi-country Study," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages S1-22, Supplemen.
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  23. Junankar, P N & Price, Simon, 1984. "The Dynamics of Unemployment: Structural Change and Unemployment Flows," Economic Journal, Royal Economic Society, vol. 94(376a), pages 158-65, Supplemen.
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  28. McElroy, Marjorie B., 1977. "Weaker MSE criteria and tests for linear restrictions in regression models with non-spherical disturbances," Journal of Econometrics, Elsevier, vol. 6(3), pages 389-394, November.
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