Citation

Discussion Paper Details

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Title: Unemployment Persistence: Does the Size of the Shock Matter?

Author(s): Gylfi Zoega

Publication Date: December 1994

Keyword(s): Equilibrium Unemployment, Hysteresis, Macroeconomic Policy, Shifting Mean Value Model and World Unemployment

Programme Area(s): Human Resources

Abstract: This paper is an empirical investigation of unemployment rate series in 17 countries. The timing and size of shifts in the mean rate of unemployment are estimated. The size of the shifts and the remaining persistence in the unemployment rate series are then related to institutional differences between the countries. The observed persistence in the unemployment hysteresis arises following large shocks to unemployment, but not following small changes. These results pose a challenge to theorists since none of the existing models of hysteresis have this property.

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Bibliographic Reference

Zoega, G. 1994. 'Unemployment Persistence: Does the Size of the Shock Matter?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1082