Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/85833 
Year of Publication: 
2002
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 02-116/4
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
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.
Subjects: 
unemployment persistence
insiders-outsiders
hysteresis
structural VAR analysis
Bayesian inference
JEL: 
E24
J64
Document Type: 
Working Paper

Files in This Item:
File
Size
362.39 kB





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