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Hysteresis in Unemployment: Panel Unit Roots Tests Using State Level Data

Author

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  • Mohan, Ramesh
  • Kemegue, Francis
  • Sjuib, Fahlino

Abstract

Most studies that use classical unit-root tests in OECD countries support the unemployment hysteresis hypothesis. However, similar classical tests performed on US data yield mixed results, uncovering specification issues. This study uses a number of panel unit root tests, which are known to overcome specification problems, to check the existence of hysteresis in unemployment data from three Massachusetts regions. The empirical results strongly reject a unit root in the unemployment rates, refuting the unemployment hysteresis hypothesis.

Suggested Citation

  • Mohan, Ramesh & Kemegue, Francis & Sjuib, Fahlino, 2007. "Hysteresis in Unemployment: Panel Unit Roots Tests Using State Level Data," MPRA Paper 5580, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:5580
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    References listed on IDEAS

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    12. G. S. Maddala & Shaowen Wu, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 631-652, November.
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    Cited by:

    1. Leyla BAŞTAV, 2019. "ABD İşgücü Piyasasında Histeresi Etkisi Üzerine Ampirik Bir Çalışma: Yeni Keynesyen Ücret Phillips Eğrisi (1990-2014)," Sosyoekonomi Journal, Sosyoekonomi Society.
    2. repec:prg:jnlpep:v:preprint:id:526:p:1-13 is not listed on IDEAS
    3. Cevik, Emrah Ismail & Dibooglu, Sel, 2013. "Persistence and non-linearity in US unemployment: A regime-switching approach," Economic Systems, Elsevier, vol. 37(1), pages 61-68.
    4. Gordana Marjanovic & Ljiljana Maksimovic & Nenad Stanisic, 2015. "Hysteresis and the NAIRU: The Case of Countries in Transition," Prague Economic Papers, Prague University of Economics and Business, vol. 2015(5), pages 503-515.

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    More about this item

    Keywords

    Hysteresis; Unemployment; panel unit root test;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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