The Nature of Occupational Unemployment Rates in the United States: Hysteresis or Structural?

26 Pages Posted: 7 Jul 2008

See all articles by Bertrand Candelon

Bertrand Candelon

University of Maastricht - Department of Economics

Arnaud Dupuy

Centre de Recherche en Économie Appliquée (CREA)

Luis A. Gil-Alana

University of Navarra - Department of Economics

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Abstract

This paper provides new evidence on the nature of occupational differences in unemployment dynamics, which is relevant for the debate between the structural or hysteresis hypotheses. We develop a procedure that permits us to test for the presence of a structural break at unknown date. Our approach allows the investigation of a broader range of persistence than the 0/1 paradigm about the order of integration, usually implemented for testing the hypothesis of hysteresis in occupational unemployment. In almost all occupations, we find support for both the structuralist and the hysteresis hypotheses, but stress the importance of estimating the degree of persistence of seasonal shocks along with the degree of long-run persistence on raw data without applying seasonal filters. Indeed hysteresis appears to be underestimated when data are initially adjusted using traditional seasonal filters.

Keywords: occupational unemployment, structuralist, hysteresis, structural break, fractional integration

JEL Classification: E24, C22, J62

Suggested Citation

Candelon, Bertrand and Dupuy, Arnaud and Gil-Alana, Luis A., The Nature of Occupational Unemployment Rates in the United States: Hysteresis or Structural?. IZA Discussion Paper No. 3571, Available at SSRN: https://ssrn.com/abstract=1155865 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Bertrand Candelon (Contact Author)

University of Maastricht - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Arnaud Dupuy

Centre de Recherche en Économie Appliquée (CREA) ( email )

Campus Limpertsberg
162A, avenue de la Faïencerie
Luxembourg, 1511
Luxembourg

Luis A. Gil-Alana

University of Navarra - Department of Economics ( email )

Campus de Arrosadia
Pamplona, 31006
Spain

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