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Empirical Economics

, Volume 56, Issue 5, pp 1489–1514 | Cite as

Decoding unemployment persistence: an econometric framework for identifying and comparing the sources of persistence with an application to UK macrodata

  • Niels Framroze MøllerEmail author
Article
  • 163 Downloads

Abstract

Most econometric analyses of persistence focus on the existence of non-stationary unemployment but not the origin of this. The present research contains a multivariate econometric framework for identifying and comparing different sources of unemployment persistence (e.g., slow adjustment versus a slowly moving equilibrium rate). The framework contains readily applicable formulas for testing different hypotheses of persistence and is used to identify the causes of this in the UK macroeconomy. The evidence suggests that persistence has been due to a slowly moving equilibrium, driven by the price of crude oil, and not to slow adjustment, for example as related to the process of wage formation, as has often been emphasized.

Keywords

Cointegration Equilibrium unemployment UK unemployment Unemployment persistence Unemployment hysteresis Unit root hysteresis 

JEL Classification

C1 C32 E24 

Supplementary material

181_2017_1400_MOESM1_ESM.zip (19 kb)
Supplementary material 1 (zip 19 KB)

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2017

Authors and Affiliations

  1. 1.Technical University of DenmarkLyngbyDenmark

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