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ON THE CAUSES OF HYSTERESIS IN LONG‐TERM UNEMPLOYMENT IN THE NETHERLANDS
Author(s) -
Graafland J. J.
Publication year - 1991
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/j.1468-0084.1991.mp53002003.x
Subject(s) - term (time) , citation , unemployment , economics , keynesian economics , library science , computer science , physics , macroeconomics , quantum mechanics
This paper investigates the empirical relevance of the insider-outsider and duration theory in explaining hysteresis in long-term unemployment. Estimation results of the wage equation show that long-term unemployment has no weaker influence on wages than short-term unemployment. This indicates that outsider status in wage formation and unemployment duration are not related. Estimation results of the U-V curve show that duration effects are more relevant, since long-term unemployment is found to have no influence on the vacancy rate. Simulation results of a small macro-labor market model show that long-term unemployment would have been considerably lower if duration effects had not occurred. Copyright 1991 by Blackwell Publishing Ltd