Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209796
Authors: 
Akram, Q. Farooq
Nymoen, Ragnar
Year of Publication: 
2001
Series/Report no.: 
Working Paper No. 2001/7
Abstract: 
Empirical and theoretical studies suggest that employment behaviour varies with the state of the labour market since hiring and firings costs depend on the availability of labour. Extending earlier empirical work on this subject, we test for state dependence in employment adjustment and in the effects of forcing variables such as indicators of aggregate demand. We also test whether anticipated labour shortage leads to multiple equilibria in (un)employment. In the inquiry, we employ a linear vector equilibrium correction model (VEqCM) and two states Markov switching VEqCMs. The models are based on quarterly data for Norwegian industry employment and aggregate unemployment in the period 1974 96. We find clear evidence of state dependent adjustment and response to changes in forcing variables. Yet equilibrium solutions for the employment and unemployment appear invariant to cyclical and structural changes in the sample.
Subjects: 
Markov switching
adjustment costs
asymmetric response
multiple equilibria
JEL: 
E24
J32
E32
C32
E51
Persistent Identifier of the first edition: 
ISBN: 
82-7553-183-7
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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