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Unemployment invariance hypothesis and structural breaks in Poland

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  • Congregado, Emilio
  • Gałecka-Burdziak, Ewa
  • Golpe, Antonio A.
  • Pater, Robert

Abstract

We study the long-run relationship between unemployment and the labour force participation rate while accounting for potential non-linearities. We explore two sources of non-linearities: structural breaks (as we allow the relationship to be time-varying) and differences by gender groups. We apply a novel approach, as we extend the cointegration analysis by combining it with structural break tests. The model is applied to Poland, which is a suitable case for study because it allows us to illustrate how this relationship operates in a developed country that was formerly centrally planned. The results qualify previous findings by providing mixed evidence for the invariance, the discouraged worker, and the added worker hypotheses. In particular, in the past, a positive and cyclical relationship – i.e., an added worker effect – could be observed, albeit with differences by gender and age group. For the current regime, we can provide evidence of a discouraged worker effect among Polish men only.

Suggested Citation

  • Congregado, Emilio & Gałecka-Burdziak, Ewa & Golpe, Antonio A. & Pater, Robert, 2021. "Unemployment invariance hypothesis and structural breaks in Poland," The Journal of Economic Asymmetries, Elsevier, vol. 24(C).
    • Handle: RePEc:eee:joecas:v:24:y:2021:i:c:s1703494921000037
    DOI: 10.1016/j.jeca.2021.e00198
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    Cited by:

    1. Maridueña-Larrea, Ángel & Martín-Román, Ángel L., 2023. "The asymmetric cyclical behaviour of female labour force participation in Latin America," MPRA Paper 117408, University Library of Munich, Germany.
    2. Martín-Román, Ángel L., 2022. "Beyond the added-worker and the discouraged-worker effects: the entitled-worker effect," Economic Modelling, Elsevier, vol. 110(C).
    3. Emilio Congregado & Ewa Galecka-Burdziak & Antonio A. Golpe & Robert Pater, 2021. "Separating aggregate discouraged and added worker effects: the case of a former transition country," Oeconomia Copernicana, Institute of Economic Research, vol. 12(3), pages 729-760, September.

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    More about this item

    Keywords

    Cointegration; Structural breaks; Discouraged worker effect; Added worker effect; Unemployment invariance hypothesis;
    All these keywords.

    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

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