Citation

Discussion Paper Details

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Title: Patterns of Unemployment: An Insider-Outsider Analysis

Author(s): Assar Lindbeck and Dennis J. Snower

Publication Date: July 1994

Keyword(s): Insiders, Labour Force, Outsiders, Persistence, Productivity and Unemployment

Programme Area(s): Human Resources

Abstract: The paper presents a stochastic insider-outsider model that accounts for the following stylized facts: (1) unemployment rates display a high degree of serial correlation, or `persistence'; (2) the average rate of unemployment has been higher in the United States than in Europe over the 1950s and 1960s, but the opposite has been the case in the 1980s; and (3) the long-run unemployment rate is independent of the level of productivity and the magnitude of the labour force. The model also generates other empirically testable hypotheses, concerning cyclical variations in unemployment persistence, the influence of firing costs and the `discouraged worker' effect on unemployment persistence, and the effect of barriers to the entry of firms on the long-run unemployment rate.

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Bibliographic Reference

Lindbeck, A and Snower, D. 1994. 'Patterns of Unemployment: An Insider-Outsider Analysis'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=960