Hysteresis in Unemployment: Panel Unit Roots Tests Using State Level Data

Ramesh Mohan (), Francis Kemegue and Fahlino Sjuib

MPRA Paper from University Library of Munich, Germany

Abstract: Most studies that use classical unit-root tests in OECD countries support the unemployment hysteresis hypothesis. However, similar classical tests performed on US data yield mixed results, uncovering specification issues. This study uses a number of panel unit root tests, which are known to overcome specification problems, to check the existence of hysteresis in unemployment data from three Massachusetts regions. The empirical results strongly reject a unit root in the unemployment rates, refuting the unemployment hysteresis hypothesis.

Keywords: Hysteresis; Unemployment; panel unit root test (search for similar items in EconPapers)
JEL-codes: C22 C23 J64 (search for similar items in EconPapers)
Date: 2007-11-02
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (4)

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