Unemployment hysteresis and the natural rate of vacancies

Knut Røed ()

Empirical Economics, 2002, vol. 27, issue 4, 687-704

Abstract: On the basis of macro data from 10 OECD countries, I find that the job vacancy rate outperforms the unemployment rate as a reliable measure of domestic inflationary pressure. Moreover, while the rate of unemployment affects inflation primarily through its difference, the vacancy rate operates through a level effect as well. In most countries, a unique equilibrium rate of vacancies seems to coexist with a drifting equilibrium rate of unemployment. I show that this result is consistent with existing theories of unemployment hysteresis that focus on depreciation of human capital and search activity during unemployment spells.

Keywords: Unemployment; ·; Vacancies; ·; Persistence; ·; Hysteresis (search for similar items in EconPapers)
JEL-codes: E24 J63 J64 (search for similar items in EconPapers)
Date: 2002-07-29
Note: received: October 1997/Final version received: June 2001
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Citations: View citations in EconPapers (8)

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