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Unemployment in Africa: A Fractional Integration Approach
Author(s) -
Caporale Guglielmo Maria,
GilAlana Luis Alberiko
Publication year - 2018
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12178
Subject(s) - tanzania , unemployment , economics , hysteresis , mean reversion , development economics , developing country , long memory , demographic economics , macroeconomics , economic growth , econometrics , socioeconomics , volatility (finance) , physics , quantum mechanics
This paper estimates long‐memory models to analyse the stochastic behaviour of unemployment in eleven African countries (Botswana, Ethiopia, Ghana, Kenya, Malawi, Mauritius, Nigeria, Senegal, South Africa, Tanzania and Zambia) from the 1960s until 2010. The empirical results provide very strong evidence of lack of mean reversion in all series under examination. This suggests that hysteresis models are the most relevant for the African experience (not surprisingly, given the rigidities in their labour markets). Therefore in such countries shocks hitting the unemployment series will have permanent effects, and policy makers should take appropriate action to reverse the effects of negative shocks.