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

27 Pages Posted: 6 May 2006

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

Multiple version iconThere are 2 versions of this paper

Date Written: December 22, 2005

Abstract

This paper provides new evidence on the nature of occupational differences in unemployment dynamics which is relevent for the debate between the structural or hysteresis hypotheses. We develop a new statistical framework that tests 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 series, would allow. 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 together 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

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? (December 22, 2005). Available at SSRN: https://ssrn.com/abstract=899337 or http://dx.doi.org/10.2139/ssrn.899337

Bertrand Candelon

University of Maastricht - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Arnaud Dupuy (Contact Author)

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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