 Investigating unemployment hysteresis in South AfricaVincent Dadam and Nicola Viegi South African Journal of Economics, 2024, vol. 92, issue 3, 331-353 Abstract: This paper investigates hysteresis in South Africa's unemployment. First, we test the presence of hysteresis in unemployment using traditional stationarity tests and non‐linear transformation methods to identify two further characteristics of hysteresis, namely, remanence and selective memory. In the second part of the paper, we estimate a simple insider–outsider model using a Bayesian vector autoregression methodology to identify the shocks driving unemployment dynamics. The main finding is that mark‐up shocks and negative productivity shocks are the main drivers of unemployment, with demand shocks playing a secondary role. Nominal wages are not responsive to real shocks and are an important component of inflation. These results point to the difficulty of absorbing the current level of unemployment without a significant increase in the flexibility of goods and labour markets. At the same time, the evidence suggests that, if reforms are being implemented, demand policies can play a significant role in improving employment and growth, reversing the structural unemployment evident in the data. Date: 2024 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:sajeco:v:92:y:2024:i:3:p:331-353 Ordering information: This journal article can be ordered from Access Statistics for this article South African Journal of Economics is currently edited by Philip A. Black More articles in South African Journal of Economics from Economic Society of South Africa Contact information at EDIRC. |
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