Rodriguez Gil, A orcid.org/0000-0002-3414-4438 (2018) Hysteresis and labour market institutions. Evidence from the UK and the Netherlands. Empirical Economics, 55 (4). pp. 1985-2025. ISSN 0377-7332
Abstract
This paper uses data for the UK and the Netherlands (1983q4–2011q4) to test if hysteresis occurs in these economies, and through what mechanisms. The novelty of the paper resides in the use of a VAR-IRF that encompasses previous hysteresis studies, using long-term unemployment, productivity, capital stock and real long-term interest rates, and in the use of specific Labour Market Institutions shocks, such as benefits, taxation or unions’ power. This allows us to disentangle what specific demand and supply-variables affect unemployment in the long-run, i.e. the NAIRU. Our findings suggest that there is hysteresis in both countries, and that it happens through several channels. Further, we find that the influence of Labour Market Institutions on unemployment depend on their impact on the real wages-productivity gap. These results have implications for structural and macroeconomic policies that we also discuss. Finally, we investigate the impact of different supply and demand-shock on long-term unemployment and discuss the relevant policy implications.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2018, The Author(s). This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made. |
Keywords: | Hysteresis; NAIRU; Labour Market Institutions; Impulse response analysis |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Economics Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 02 Oct 2017 12:19 |
Last Modified: | 23 Jun 2023 22:36 |
Status: | Published |
Publisher: | Springer |
Identification Number: | 10.1007/s00181-017-1338-y |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:121868 |