Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/85833
Authors: 
Amisano, Gianni
Serati, Massimiliano
Year of Publication: 
2002
Series/Report no.: 
Tinbergen Institute Discussion Paper 02-116/4
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

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