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A Reduced-form Equation for the Unemployment Rate Estimated from a Panel of Nineteen OECD Countries

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  • Dimitris Hatzinikolaou

    (University of Ioannina, Greece)

  • Konstantina Girtzimani

    (University of Ioannina, Greece)

  • Christos Mousafiris

    (University of Ioannina, Greece)

Abstract

Using a dynamic fixed-effects model for a panel of nineteen OECD countries and annual aggregate data, 1970-2008, we estimate a reduced-form equation for the observed unemployment rate. We find that wage-push factors, such as employment protection and union power, increase the unemployment rate, whereas net immigration reduces it, although this last effect is practically negligible. We also find that the labour market is characterised by strong “lagged adjustment processes,” so the governments of the countries in the sample have an additional incentive to fight current unemployment, to prevent it from becoming prolonged.

Suggested Citation

  • Dimitris Hatzinikolaou & Konstantina Girtzimani & Christos Mousafiris, 2015. "A Reduced-form Equation for the Unemployment Rate Estimated from a Panel of Nineteen OECD Countries," The Economic and Social Review, Economic and Social Studies, vol. 46(3), pages 389-397.
    • Handle: RePEc:eso:journl:v:46:y:2015:i:3:p:389-397
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    References listed on IDEAS

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