The Beveridge curve and labour market dynamics in Turkey

This article investigates the dynamics of unemployment and vacancy rates in Turkey during the period 1951 to 2008 by means of a Beveridge Curve (BC). The time-series analysis of unemployment and vacancies as well as two other relevant labour market variables, real wages and real labour productivity, strongly suggests inefficiency in the Turkish labour market. A stable long-run relationship between unemployment rate and vacancy rate is found for Turkey, that is, the existence of a negatively sloped BC is verified. The estimated Turkish BC reflects the structural problems and lack of flexibility in the labour market. The modified BC with real wages and labour productivity reveals that labour productivity has no significant effect on unemployment rate whereas wages have positive and significant effects on the same variable.     

Unemployment and labour force participation in Turkey

This article investigates the relationship between labour force participation rate and unemployment rate in Turkey a developing country. Cointegration analysis is carried out for the aggregate and gender-specific series. The findings indicate that there is no long-run relationship between labour force participation and unemployment rates in Turkey. Thus, unlike in the case of the developed countries, the unemployment invariance hypothesis is supported in Turkey.     

Examining the link between crime and unemployment: a time-series analysis for Canada

We use national and regional Canadian data to analyse the relationship between economic activity (as reflected by the unemployment rate) and crime rates. Given potential aggregation bias, we disaggregate the crime data and look at the relationship between six different types of crimes rates and unemployment rate; we also disaggregate the data by region. We employ an error correction model in our analysis to test for short-run and long-run dynamics. We find no evidence of long-run relationship between crime and unemployment, when we look at both disaggregation by type of crime and disaggregation by region. Lack of evidence of a long-run relationship indicates we have no evidence of the motivation hypothesis. For selected types of property crimes, we find some evidence of a significant negative short-run relationship between crime and unemployment, lending support to the opportunity hypothesis. Inclusion of control variables in the panel analysis does not alter the findings, qualitatively or quantitatively.     

Unemployment and labour-force participation in Sweden

This paper investigates the relationship between Swedish unemployment and labour-force participation. Cointegration analysis supports a robust long-run relationship between the two variables. This finding puts the empirical relevance of the unemployment invariance hypothesis into question.     

Taiwan's exports and trade imbalance against US and Japan: an empirical investigation based on error correction model

This study employs recent advances in time-series analysis, cointegration and error correction model, to examine the long-run and short-run determinants of the exports and trade imbalance between the USA, Japan, and Taiwan. The unit root tests reveal nonstationary in most of the variables. The cointegration tests affirm positive the long-run associations are between the exchange rate changes and the exports as well as the trade imbalance. Once these long-run effects are accounted for, it is found that there are evidences of short-run relationship between these variables.     

Unemployment and labor force participation in the United States

This paper uses historical data from the United States to investigate the relationship between unemployment and labor force participation. Cointegration analysis supports a long-run relationship between these two variables, which leads us to question the empirical relevance of the unemployment invariance hypothesis for the United States.     

Does the unemployment invariance hypothesis hold for Romania?

This article questions whether the unemployment invariance hypothesis of Layard et al. (2005), which states that movements in labour force do not significantly affect unemployment rates, holds true for Romania. Using quarterly labour force data for the 1996–2012 period, we explore the time-series properties of the two variables. We find that unemployment rates and participation rates have unit roots, and that they are not cointegrated, meaning that no significant long-term relationship exists between them. The analysis carried out on the first differences of unemployment rates and participation rates shows discouraged and added worker effects for Romania’s female labour force. This conclusion diverges from findings that point out to a stable, long-term relationship between unemployment and participation in several developed countries (Japan, Sweden, USA) and shows that Romanian labour market is highly adaptive, where changes in labour force participation do not lead to increases in unemployment. This finding can help model the influence of adverse developments such as ageing and emigration, and show their true impact beyond demographic doom scenarios. It also points out the role played by labour demand in shaping the evolution of the Romanian labour market.     

AN ECONOMIC INTERPRETATION OF SUICIDE CYCLES IN JAPAN

Suicide rates in Japan have increased dramatically in recent years, making Japan's male rate the highest among developed economies. This study revises the standard economic model of suicide to accommodate Japan's experience, focusing on the change in human capital for the unemployed. We then use the new model and detrended data to empirically investigate the relationship between the suicide cycle and the unemployment cycle. Unlike previous aggregate time series studies, we find that the relationship between the suicide rate and the unemployment rate is significantly and robustly positive for both men and women even after controlling for several social variables. ( JEL I12, J60, E30)     

Crime rates,male youth unemployment and real income in Australia: evidence from Granger causality tests

This article applies Granger causality tests to examine the relationship between seven different categories of property crime and violent crime against the person, male youth unemployment and real male average weekly earnings in Australia from 1964 to 2001 within a cointegration and vector error correction framework. It is found that fraud, homicide and motor vehicle theft are cointegrated with male youth unemployment and real male average weekly earnings. However, there is no evidence of a long-run relationship between either break and enter, robbery, serious assault or stealing with male youth unemployment and real male average weekly earnings.     

Exchange rate volatility and its impact on domestic investment

The relationship between exchange rate uncertainty and domestic investment has attracted some attention in macro literature. Previous studies that investigated the relation concentrated on firm level data with mixed results. In this paper we argue that the relationship applies equally at the aggregate. We assess the short-run and long-run effects of exchange rate volatility on domestic investment in each of the 36 countries in our sample using time-series data. The application of the bounds testing approach indicates that exchange rate volatility has significant short-run effects on domestic investment in 27 countries. The short-run effects are translated into the long-run only in 12 countries.     

Modeling crime in Japan

This study aims at identifying the factors of aggregate and disaggregate crime categories in Japan over the period 1964–2009. All crime categories are related to police outlays, police numbers, unemployment, divorce and urbanization rates. Bounds testing approach to cointegration is implemented to test the existence of a long-run relationship amongst the variables. Cointegration analysis yields that the main deterrent effect on crime is the police presence and this factor is further confirmed by the real police outlays. As for the essential cause of crime, urbanization stands as the leading factor which is followed by divorce and unemployment rates. Policy implications are discussed.     

总需求和总供给冲击对我国失业和产出动态关系的影响分析

在我国的失业产出关系中,短期内,总供给冲击是产出波动的主要来源,总需求冲击则是失业波动的主要来源,总需求冲击和总供给冲击共同破坏了产出失业之间反向变化关系,但是总需求冲击的破坏作用更多一些。在长期,总需求冲击对产出没有影响,总供给冲击对产出有显著的正的影响,总需求冲击在长期对失业没有影响,但总供给冲击在长期会对失业产生不利影响,即正的供给冲击的累积影响所带来的产出增加在长期使我国的失业率上升。     

INSIDER-OUTSIDER EFFECTS IN WAGE FORMATION: AN EMPIRICAL SURVEY*

The paper provides a review of empirical work on insider-outsider and duration effects in wage formation. It presents a theoretical model to investigate the relationship between previous employment and the wage rate. The impact of unemployment and long-term unemployment is considered. Empirical results show that the effect of previous employment on the wage rate is generally insignificant. Both short-term and long-term unemployment appear to have a significant negative impact. Micro-studies reveal that both firm-specific and aggregate variables play a role in wage determination.     

Estimation of a German money demand system – a long-run analysis

This study presents a multivariate analysis of the stability of long-run relationships between variables that influence the conduct and transmission process of the German monetary policy. The initial VAR comprises the variables real money M3, real GNP, the inflation rate, a long-term and a weighted short-term interest rate. A multivariate approach has been chosen, as this allows for more than one cointegration relationship and to test restrictions on the cointegration space. In contrast to most other studies on German monetary policy, three stable and economically plausible cointegration relationships are obtained simultaneously within the framework of the Johansen procedure: a money demand relationship, a long-run Fisher effect and a long-run relationship between the short- and the long-term interest rate. It is apparent that the structural break of German reunification can be modelled incorporating dummy variables in the model. First version received: October 1996/final version received: July 1997     

Trade and unemployment: What do the data say?

This paper documents a robust empirical regularity: in the long-run, higher trade openness is associated with a lower structural rate of unemployment. We establish this fact using: (i) panel data from 20 OECD countries, (ii) cross-sectional data on a larger set of countries. The time structure of the panel data allows us to control for unobserved heterogeneity, whereas cross-sectional data make it possible to instrument openness by its geographical component. In both setups, we purge the data of business cycle effects, include a host of institutional and geographical variables, and control for within-country trade. Our main finding is robust to various definitions of unemployment rates and openness measures. Our benchmark specification suggests that a 10 percentage point increase in total trade openness reduces aggregate unemployment by about three quarters of one percentage point.     

The short- and long-run impacts of financial crises on youth unemployment in OECD countries

The impact of financial crises on the youth unemployment rate (YUR), compared to the total unemployment rate (UR), is estimated for a panel of OECD countries over the period 1981–2009, using bias-corrected dynamic panel data estimators of short- and long-run coefficients. Both YUR and UR are found highly persistent. Also, short- and long-run effects of financial crises on YUR are significantly large, respectively, some 1.9 and 1.5–1.7 times higher than the short- and long-run effects on UR. Similar results are found for the unemployment impacts of GDP growth lagged 1 year and institutional variables. These results are robust to various dynamic specifications.     

The consequences of labor market flexibility: Panel evidence based on survey data

We introduce a new data set on hiring and firing restrictions for 21 OECD countries for the period 1984-1990. The data are based on surveys of business people in the countries covered, so the indices we use are subjective in nature. Controlling for country and time fixed effects, and using dynamic panel data techniques, we find evidence that increasing the flexibility of the labor market increases both the employment rate and the rate of participation in the labor force. A conservative estimate suggests that if France were to make its labor markets as flexible as those in the US, its employment rate would increase 1.6 percentage points, or 14% of the employment gap between the two countries. The estimated effects are larger in the female than in the male labor market, although both groups seem to have similar long-run coefficients. There is also some evidence that more flexibility leads to lower unemployment rates and to lower rates of long-term unemployment. We also find evidence consistent with the hypothesis that inflexible labor markets produce “jobless recoveries” and introduce more unemployment persistence.     

Investment-specific technological changes: The source of long-run TFP fluctuations

Technological innovations originating in the capital–producing sector may spillover to the rest of the economy and enhance aggregate TFP in the long-run. This paper assesses the quantitative importance of investment-specific technological changes in long-run movements in aggregate TFP. To this end, we construct a two-sector business cycle model where an IST diffusion process influences long-run movements in aggregate TFP via spillover. We then establish the linkage between the primitive shocks of the model and two shocks that can be identified from a VAR approach: one shock accounting for the long-run movement in aggregate TFP and the other accounting for the long-run movement in the inverse of the relative price of investment. We show analytically that the correlation of these two long-run shocks can be fruitful in distinguishing the quantitative importance of IST innovations in long-run movements in aggregate TFP. Using post-war U.S. data, we find that these two long-run shocks identified by the MFEV approach are almost perfectly collinear. Moreover, these two shocks can explain a significant, and surprisingly similar, fraction of the business-cycle fluctuations in other important macro variables. Our findings suggest that embodied technological changes are an important driver of long-run movements in aggregate TFP.     

A cointegration analysis of gasoline demand in the United States

Time-series estimation of gasoline demand elasticities often does not take into account the possibility of nonstationarity in the underlying data, which may render the parameter estimates spurious. Studies have shown that the time trending variables used to explain gasoline demand could be difference stationary and therefore, may require cointegration analysis to assess the relationship among the trending variables. In this work we use the cointegration technique to derive long-run and short-run demand elasticities of noncommercial gasoline consumption using time-series data for the USA from 1949 to 2004. We also attempt to incorporate the presence of a structural break in the data generation process of the time trending variables. Our results show that the consumption of gasoline and lifetime income have a long-term stable relationship after the second oil shock of 1978. Prior to the first oil shock of 1973, no such long-run relationship could be established through cointegration.     

A multiple time-series analysis of labor supply and earnings in economic development

Using multivariate time-series techniques, the dynamics of male and female labor supply and earnings in Puerto Rico are examined during a period of rapid economic developemnt, 1953–1978. The temporal analysis suggests that aggregate male and female labor force participation rates are exogenous to male and female earnings. In addition, continous declines in male participation have been partly responsible for increases in both male and female earnings and a narrowing of relative earnings differentials. The study also finds that the advent of the Food Stamp Program in 1975 has resulted in a small reduction in male labor force participation. Moreover, the inclusion of food stamps as an intervention component is quite useful in forecasting the male participation rate. The forecasting accuracy of univariate and multivariate models is assessed with the result that, in every instance, the multivariate transfer functions prove superior. Overall, the results support the incorporation of multiple time-series in econometric studies of developing countries and provide evidence of its usefullness for development planning and policy.