Testing Unemployment Hysteresis with Multi-Factor Panel Unit Root: Evidence from OECD Countries

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dc.authoridCoskun, Muhammet Fatih/0000-0002-7174-6550
dc.contributor.authorKonat, Gokhan
dc.contributor.authorCoskun, Muhammet Fatih
dc.date.accessioned2024-08-04T20:53:07Z
dc.date.available2024-08-04T20:53:07Z
dc.date.issued2022
dc.departmentİnönü Üniversitesien_US
dc.description.abstractHysteresis is a dominant feature of unemployment in numerous countries. According to the hysteresis hypothesis, it is a well-known fact that high unemployment may persist and remain an economic threat in the long run if policy measures are not taken. In this study, it is tested whether the unemployment rates for 10 selected countries of the Organisation for Economic Co-operation and Development (OECD) (Belgium, Canada, Czech Republic, Estonia, France, Japan, Netherlands, Spain, Britain and the USA) contain unit root or not, in other words, whether the hysteresis effect is valid for these countries. For this purpose, this study utilises the concept of the multi-factor panel unit root test proposed by Pesaran, Smith and Yamagata. This method measures cross-section dependence through factors. The test analyses whether the unit root is valid or not, using information about a sufficient number of additional explanatory variables. The characteristic of these additional variables is that they must share a common factor with the variable whose stationarity is tested. It is accepted that this common factor causes cross-sectional dependence. We have taken tax wedge, trade union density and minimum wage as factors that cause cross-sectional dependency and affect unemployment hysteresis. In this test developed by the authors, in the case of a multi-factor error structure, the test procedure is completed by using the information contained in 3 additional variables. The study explores not only the validity of unemployment hysteresis but also the factors that affect the rigidity of the unemployment rate. However, the research was unable to encompass the entire OECD countries and all times because of the lack of data. The results showed that the hysteresis is valid for 10 selected OECD countries.en_US
dc.identifier.doi10.17059/ekon.reg.2022-3-9
dc.identifier.endpage754en_US
dc.identifier.issn2072-6414
dc.identifier.issn2411-1406
dc.identifier.issue3en_US
dc.identifier.scopus2-s2.0-85141710301en_US
dc.identifier.scopusqualityN/Aen_US
dc.identifier.startpage742en_US
dc.identifier.urihttps://doi.org/10.17059/ekon.reg.2022-3-9
dc.identifier.urihttps://hdl.handle.net/11616/100986
dc.identifier.volume18en_US
dc.identifier.wosWOS:000979820800009en_US
dc.identifier.wosqualityN/Aen_US
dc.indekslendigikaynakWeb of Scienceen_US
dc.indekslendigikaynakScopusen_US
dc.language.isoenen_US
dc.publisherRussian Acad Sciences, Ural Branch, Inst Economicsen_US
dc.relation.ispartofEconomy of Regionen_US
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanıen_US
dc.rightsinfo:eu-repo/semantics/openAccessen_US
dc.subjectunemploymenten_US
dc.subjecthysteresisen_US
dc.subjecttax wedgeen_US
dc.subjecttrade union densityen_US
dc.subjectminimum wageen_US
dc.subjectpanel dataen_US
dc.subjectcross-section Augmented Dickey-Fulleren_US
dc.subjectmultifactoren_US
dc.subjectunit rooten_US
dc.subjectOECDen_US
dc.titleTesting Unemployment Hysteresis with Multi-Factor Panel Unit Root: Evidence from OECD Countriesen_US
dc.typeArticleen_US

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