No. 6/2002
HYSTERESIS IN UNEMPLOYMENT: EVIDENCE FROM NORWEGIAN COUNTIES
Kåre Johansen
Abstract:
The paper tests hysteresis effects in unemployment using aggregate and
panel data for Norway. While tests using aggregate or countyspecific
time series do not reject the null of unit root hysteresis, the panel
tests firmly reject the null. When a onetime structural break is
incorporated, the unit root hypothesis is rejected (or nearly so) in most
counties. All results reveal a high degree of unemployment persistence,
but the speed of adjustment is much higher when we allow for a change
in mean.
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