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A Nonparametric Analysis of Regional Unemployment Dynamics in Britain

Author

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  • Marco Bianchi
  • Gylfi Zoega

Abstract

This paper estimates the probability distribution of relative county unemployment in Britain for the years 1981-1995. We find that the distribution is unimodal in all years, with a falling variance between 1989 and 1994. We use bootstrap methods to determine critical values for the two tails of the distribution, and analyze intra-distribution dynamics. An unemployment shock is defined as a move between a tail and the centre of the distribution (and vice versa). The persistence of a shock is defined by the number of time periods a country stays in a state before switching to another state. We find that positive shocks (those that reduce unemployment) tend to persist longer than negative ones. We also calculate transition probabilities and find that the probability of leaving any given state is very low, and is lower for the state of high relative unemployment than for the state of low relative unemployment.

Suggested Citation

  • Marco Bianchi & Gylfi Zoega, 1996. "A Nonparametric Analysis of Regional Unemployment Dynamics in Britain," Archive Discussion Papers 9620, Birkbeck, Department of Economics, Mathematics & Statistics.
    • Handle: RePEc:bbk:bbkewp:9620
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    References listed on IDEAS

    as
    1. Marco Bianchi & Gyfli Zoega, 1996. "How Quickly do British Regions Recover?," Archive Discussion Papers 9622, Birkbeck, Department of Economics, Mathematics & Statistics.
    2. Bianchi, Marco, 1997. "Testing for Convergence: Evidence from Non-parametric Multimodality Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(4), pages 393-409, July-Aug..
    3. Pencavel, John, 1994. "British Unemployment: Letter from America," Economic Journal, Royal Economic Society, vol. 104(424), pages 621-632, May.
    4. Pissarides, Christopher A & McMaster, Ian, 1990. "Regional Migration, Wages and Unemployment: Empirical Evidence and Implications for Policy," Oxford Economic Papers, Oxford University Press, vol. 42(4), pages 812-831, October.
    5. Evans, Philip & McCormick, Barry, 1994. "The New Pattern of Regional Unemployment: Causes and Policy Significance," Economic Journal, Royal Economic Society, vol. 104(424), pages 633-647, May.
    6. Jackman, Richard & Savouri, Savvas, 1992. "Regional Migration in Britain: An Analysis of Gross Flows Using NHS Central Register Data," Economic Journal, Royal Economic Society, vol. 102(415), pages 1433-1450, November.
    7. Gordon Hughes & Barry McCormick, 1991. "Housing Markets, Unemployment and Labour Market Flexibility in the U.K," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 83-114, National Bureau of Economic Research, Inc.
    8. repec:bla:econom:v:61:y:1994:i:244:p:509-27 is not listed on IDEAS
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    Cited by:

    1. repec:rre:publsh:v:37:y:2007:i:3:p:282-302 is not listed on IDEAS
    2. Profit, Stefan, 1997. "Twin peaks in regional unemployment and returns to scale in job-matching in the Czech Republic," SFB 373 Discussion Papers 1997,63, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    3. Fabio Canova & Evi Pappa, 2006. "Does It Cost to Be Virtuous? The Macroeconomic Effects of Fiscal Constraints," NBER Chapters, in: NBER International Seminar on Macroeconomics 2004, pages 327-370, National Bureau of Economic Research, Inc.
    4. Stefan Profit, 1998. "Twin peaks in regional unemployment and returns to scale in job-matching in the Czech Republic," ERSA conference papers ersa98p42, European Regional Science Association.
    5. Joanna Tyrowicz & Piotr Wojcik, 2010. "Active Labour Market Policies and Unemployment Convergence in Transition," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 2(1), pages 46-72, January.

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    More about this item

    Keywords

    Regional unemployment; panel data; asymmetric persistence of shocks; nonparametric analysis.;
    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
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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