Hysteresis in unemployment: Evidence from Latin America

Mednik, Matias; Rodriguez, Cesar M.; Ruprah, Inder J.

doi:10.1002/jid.1755

Cited by 12 publications

(8 citation statements)

References 32 publications

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“…To determine the optimal lag length (p), the Akaike Information Criteria (AIC) is used in the regression analysis, which also solves biased parameters emerging in the estimation. However, additional lags reduce the power of the test (Mednik et al, 2012). Therefore, the choice of the methodological background should be well-designed for the selection of lag length.…”

Section: Individual Unit-root Testsmentioning

confidence: 99%

Unemployment Hysteresis: Attached or Mismatched?

Özdemir¹

2021

SAEB

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This paper investigates the empirical significance of the unemployment problem whether it is structural or temporary on the basis of region-based, income-based and aggregate classifications of different countries for the yearly data from 1991 to 2018. In the first part of the paper, we examine the stationary position of unemployment series by way of using individual unit-root tests. Since the series are possibly subjected to the structural breaks, we also use additional approaches in which the effects of the break dates are checked in the analysis. Furthermore, we compare the initial findings of univariate unit-root tests along with panel unit-root testing procedures to critically assess the statistical validity of the hysteresis hypothesis in unemployment for given samples. The empirical findings imply that we cannot reject the hysteresis hypothesis for different classifications of the countries against the alternative of a natural rate even in the presence of structural breaks.

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Section: Individual Unit-root Testsmentioning

confidence: 99%

Unemployment Hysteresis: Attached or Mismatched?

Özdemir¹

2021

SAEB

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“…Finalmente, la literatura sobre histéresis arroja también resultados ambiguos sobre la efectividad o no de la flexibilidad laboral para abatir el desempleo (Cross et al, 1990;Maurer y Nivia, 1994;Dias, 1995;León-Ledesma y McAdam, 2004;Cheng-Hsun et al, 2008;Mednik et al, 2012;Ayala et al, 2012;Dritsaki y Dritsaki, 2013). Lo anterior debido a que a lo largo de estos trabajos no siempre se confirma que la tasa de desempleo sea no estacionaria (a través del rechazo de las hipótesis de raíz unitaria de la serie en cuestión).…”

Section: El (Des)empleo En La Visión Teórica Neoclásicaunclassified

Desempleo en América Latina: ¿flexibilidad laboral o acumulación de capital?

García¹,

Blanco²

2017

RPD

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ResumenEl desempleo en América Latina ha tenido una disminución sustancial durante el periodo 2000-2013. Desde el punto de vista teórico convencional, lo anterior sería consecuencia de las reformas orientadas a flexibilizar el mercado de trabajo. Por otro lado, la visión post-keynesiana sustentaría que la caída de la tasa de desempleo se debe al aumento de la acumulación de capital. El presente documento intenta conocer cuál de estas visiones teóricas es apoyada por la evidencia empírica. Los resultados del panel de datos sugieren que la acumulación de capital es la variable que explica mayormente el desempeño del desempleo. La recomendación de política de esta evidencia es mantener en crecimiento la inversión a través de instrumentos que estimulen la demanda efectiva. Palabras clave: desempleo, mercado de trabajo, datos de panel, teoría post-keynesiana, teoría neoclásica. AbstractUnemployment in Latin America fell substantially in 2000-2013, which, from the standpoint of conventional theory, would be the outcome of reforms designed to make the labor market more flexible. On the other hand, a post-keynesian perspective would maintain that a dropping unemployment rate is due to rising capital accumulation. This paper aims to determine which of these theoretical visions is supported by the empirical evidence. The panel data results suggest that capital accumulation is the variable that explains the majority of the behavior of unemployment. The policy recommendation based on this evidence is to keep investment growing via instruments that stimulate effective demand.

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“…Gomes and Silva (2009) find evidence in support of the hysteresis hypothesis in six Brazilian metropolitan areas for the period 1981-2002, by using unit root tests with structural breaks on monthly unemployment rate data. To the best of our knowledge, the only country level paper on the unemployment rate dynamics in Latin America is Mednik et al (2011), who test the hysteresis hypothesis in 13 countries for the period 1980-2005. Their findings provide support for the hysteresis hypothesis in the majority of the countries under study.…”

Section: Introductionmentioning

confidence: 99%

“…the authors mention that some of their results are sensitive to higher frequency data or longer time series that were not available for the majority of the countries analyzed. In particular, Mednik et al (2011) report that their test results about the structuralist hypothesis (panel unit root tests with structural breaks) are not very reliable due to the small sample size (25 years, annual data).…”

Section: Introductionmentioning

confidence: 99%

“…Second, the econometric methods applied in the article provide tests for the four unemployment theories (NRU, structuralist, persistence and hysteresis hypotheses). This article is an extension of Mednik et al (2011) since -besides the test of the NRU, structuralist and hysteresis hypotheses tested by these authors-we also perform a fractional integration-based test for the persistence hypothesis.…”

Section: Introductionmentioning

confidence: 99%

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Unemployment Hysteresis: Empirical Evidence for Latin America

Ayala

Cuñado

Gil-Alana

2012

Journal of Applied Economics

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This paper analyzes the unemployment dynamics of 18 Latin American countries for the last four decades. We use a time series approach to test the mean reversion of unemployment rates and its approximation to a Natural Rate of Unemployment (NRU). The tests include the possibility of one and two structural changes to account for the occurrence of significant macroeconomic changes experienced by the Latin American economies. In addition, we estimate the order of integration of the series, allowing for fractional degrees of differentiation, to assess the persistence of unemployment in the region. Our results indicate that when endogenous structural changes are included in the model, in general we find evidence of mean reversion of unemployment rates for the Latin American countries under study. Therefore, our findings support the structuralist hypothesis of unemployment.

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Hysteresis in unemployment: Evidence from Latin America

Cited by 12 publications

References 32 publications

Unemployment Hysteresis: Attached or Mismatched?

Unemployment Hysteresis: Attached or Mismatched?

Desempleo en América Latina: ¿flexibilidad laboral o acumulación de capital?

Unemployment Hysteresis: Empirical Evidence for Latin America

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