Unemployment hysteresis in EU countries: what do we really know about it?

Abstract

Purpose

The paper aims to re‐examine the stationarity properties of unemployment rates in 12 European Union (EU) countries over the period 1988: I‐1999: IV.

Design/methodology/approach

This paper applies a battery of second‐generation panel unit root tests that allow for cross‐sectional correlation.

Findings

The study shows that, contrary to previous empirical literature, hysteresis does not characterise EU unemployment.

Originality/value

This paper uses recent advances in the econometrics of panel unit root tests. The new tests have more power than the traditional ones in detecting the null hypothesis of a unit root.

Citation

Christopoulos, D.K. and León‐Ledesma, M.A. (2007), "Unemployment hysteresis in EU countries: what do we really know about it?", Journal of Economic Studies, Vol. 34 No. 2, pp. 80-89. https://doi.org/10.1108/01443580710745353