Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2002-11-18
Number: 02-116/4
Author-Name: Gianni Amisano
Author-Email: amisano@eco.unibs.it
Author-Workplace-Name: University of Brescia, Italy
Author-Name: Massimiliano Serati
Author-Email: mserati@liuc.it
Author-Workplace-Name: Cattaneo University, Italy
Title: What goes up sometimes stays up: Shocks and Institutions as Determinants of Unemployment Persistence
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.
Classification-JEL: E24; J64
Keywords: unemployment persistence; insiders-outsiders; hysteresis; structural VAR analysis; Bayesian inference
File-Url: https://papers.tinbergen.nl/02116.pdf
File-Format: application/pdf
File-Size: 371087 bytes
Handle: RePEc:tin:wpaper:20020116