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Unemployment in the OECD: models and mysteries

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  • Junankar, P.N.
  • Madsen, J.B.

Abstract

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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Suggested Citation

  • Junankar, P.N. & Madsen, J.B., 1996. "Unemployment in the OECD: models and mysteries," Discussion Paper Series In Economics And Econometrics 9648, Economics Division, School of Social Sciences, University of Southampton.
  • Handle: RePEc:stn:sotoec:9648
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    Citations

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    Cited by:

    1. Andrew S. Downes, 1998. "Un análisis económico del desempleo en Trinidad y Tobago," Research Department Publications 4135, Inter-American Development Bank, Research Department.
    2. Junankar, Pramod N. (Raja), 2011. "The Global Economic Crisis: Long-Term Unemployment in the OECD," IZA Discussion Papers 6057, Institute for the Study of Labor (IZA).
    3. Elgin, Ceyhun & Kuzubas, Tolga Umut, 2013. "Wage-productivity gap in OECD economies," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 7, pages 1-21.
    4. Antonia López‐Villavicencio & José Ignacio Silva, 2011. "Employment Protection And The Non‐Linear Relationship Between The Wage‐Productivity Gap And Unemployment," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(2), pages 200-220, May.
    5. Cowgill, Matt, 2013. "A Shrinking Slice of the Pie: The Labour Income Share in Australia," MPRA Paper 46209, University Library of Munich, Germany.
    6. Andrew S. Downes, 1998. "An Economic Analysis of Unemployment in Trinidad and Tobago," Research Department Publications 4134, Inter-American Development Bank, Research Department.
    7. Michèle Belot & Jan C. van Ours, 2004. "Does the recent success of some OECD countries in lowering their unemployment rates lie in the clever design of their labor market reforms?," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 621-642, October.
    8. Andrew S. Downes, 1998. "An Economic Analysis of Unemployment in Trinidad and Tobago," IDB Publications (Working Papers) 6081, Inter-American Development Bank.
    9. Nir Klein, 2012. "Real Wage, Labor Productivity, and Employment Trends in South Africa; A Closer Look," IMF Working Papers 12/92, International Monetary Fund.
    10. Laurence Ball, 1999. "Aggregate demand and Long-Run Unemployment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(2), pages 189-252.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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