Hysteresis and Insider-Outside Theory - A Literature Review

Michael Dobbie

No 408, Research Papers from Macquarie University, Department of Economics

Abstract: In recent years a large theoretical and empirical literature has emerged on hysteresis in unemployment. This paper reviews the theoretical part of this literature, including the various insider-outsider models that have been advanced to explain hysteresis. The review finds that while the assumptions required to generate full hysteresis are somewhat extreme, a less severe form of hysteresis, called persistence, emerges quite readily from models with reasonable assumptions. The paper however questions the extent to which the recent experience of unemployment can be explained by this approach.

Keywords: Hysteresis; persistence; insider-outsider theory (search for similar items in EconPapers)
JEL-codes: E24 J6 (search for similar items in EconPapers)
Pages: 30 pages.
Date: 2004-09
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:mac:wpaper:0408

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