What goes up sometimes stays up: Shocks and Institutions as Determinants of Unemployment Persistence

Gianni Amisano and Massimiliano Serati ()

No 02-116/4, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We analyse the determinants of unemployment persistence in four OECDcountries byestimating a structural Bayesian VAR with an informative priorbased on an insiders/outsiders model. We explicitly insert unemployment ben-efits and labour taxes so that our identification is not affected by the Faust andLeeper (1997) critique. We find widespread hysteresis: demand shocks play adominant role in explaining unemployment also in the medium-run. Moreoverreal wages have low sensitivity to cyclical fluctuations and to labour marketdisequilibria. Our results emphasise the real power of the unions and their in-teractions with structural shocks and other institutions as crucial determinantsof hysteresis.

Keywords: unemployment persistence; insiders-outsiders; hysteresis; structural VAR analysis; Bayesian inference (search for similar items in EconPapers)
JEL-codes: E24 J64 (search for similar items in EconPapers)
Date: 2002-11-18
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://papers.tinbergen.nl/02116.pdf (application/pdf)

Related works:
Journal Article: What goes up sometimes stays up: shocks and institutions as determinants of unemployment persistence (2003)
Working Paper: What goes up sometimes stays up: shocks and institutions as determinants of unemployment persistence (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20020116

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().