Panel Causality and Cointegration between Productivity and Unemployment

Joao Jalles

Applied Economics Quarterly (formerly: Konjunkturpolitik), 2015, vol. 61, issue 2, 141-153

Abstract: This paper empirically investigates the link between productivity and unemployment in a panel of 19 OECD countries between 1970 and 2010. By means of recently developed panel data econometric methods, we find that unemployment and productivity are non-stationary in levels and they are cointegrated for the panel as a whole. In terms of causality, the stronger directional relationship runs from unemployment to productivity. Furthermore, the long-run effect seems to be generally positive, therefore favouring of those theories which suggest that prolonged recessions foster long-run productivity improvements.

Keywords: Productivity; Unemployment; Causality and Cointegration between Productivity and Unemployment (search for similar items in EconPapers)
Date: 2015
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