Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/2470
Authors: 
Karanassou, Marika
Snower, Dennis J.
Year of Publication: 
2000
Series/Report no.: 
IZA Discussion paper series 127
Abstract: 
The aim of this paper is to analyze and estimate salient characteristics of unemployment dynamics. Movements in unemployment are viewed as "chain reactions" of responses to labor market shocks, working their way through systems of interacting lagged adjustment processes. In the context of estimated labor market systems for Germany, the UK, and the US, we construct aggregate measures of unemployment responses to temporary and permanent shocks. These measures are temporal (depicting how long it takes for unemployment to reach long-run equilibrium) and quantitative (depicting the cumulative amount of unused labor resources generated in the aftermath of a shock). Furthermore, we estimate the contributions of individual lagged adjustments to these aggregate measures. Our empirical results indicate that (i) lagged adjustment processes play an important part in explaining how temporary and permanent shocks affect unemployment, (ii) temporary and permanent shocks can yield quite different inter-country comparisons of unemployment effects, and (iii) the quantitative and temporal measures can also yield markedly different inter-country comparisons. This analysis provides insights into the driving forces underlying the movements of unemployment in the countries above.
Subjects: 
Unemployment
Natural rate hypothesis
Labor markets
Employment
Adjustment costs
JEL: 
J32
E37
E30
J64
J60
Document Type: 
Working Paper

Files in This Item:
File
Size
585.16 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.