<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">Most studies that use classical unit-root tests in OECD countries support the unemployment hysteresis hypothesis. However, similar classical tests performed on US data yield mixed results, uncovering specification issues. This study uses a number of panel unit root tests, which are known to overcome specification problems, to check the existence of hysteresis in unemployment data from three Massachusetts regions. The empirical results strongly reject a unit root in the unemployment rates, refuting the unemployment hysteresis hypothesis.</span></span><span style="font-size: 10pt; mso-ansi-language: FR;" lang="FR"></span></p>

In the current economy, states and substate regions seek to identify the sources of economic growth in order to improve economic development efforts.  The objectives of the paper are threefold.  First, using selected economic criteria, we examine the growth in the labor force of the substate region.  Second, using selected economic indicators, we detect the existence of growth in employment, establishments, payroll and wages in the substate region.  Finally, we explore the causal relationship among selected economic variables in the substate region and determine the direction of causality between variables.  Several techniques and analyses are used in this study, including labor force analysis, location quotients, and the error correction model. The methodology and economic indicators used in this research can be applied to similar substate regions allowing comparison among regions and facilitating regional economic development efforts.