Asymmetry in the Unemployment–Output Relationship Over the Business Cycle: Evidence from Transition Economies

Çevik, Emrah İsmail; Dibooğlu, Sel; Barışık, Salih

doi:10.1057/ces.2013.7

Cited by 30 publications

(24 citation statements)

References 36 publications

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“…In particular, the model does not suffer from autocorrelation, heteroscedasticity, model misspecification, residual non-normality and parameter instability. Overall, our main result is consistent with previous literature that confirms non-linearities in the unemployment-output relationship (Cuaresma, 2003, Cevik, Dibooglu and Barişik, 2013, Phiri, 2014, Marinkov and Geldenhuys, 2007. Despite the use of different functional forms, the results demonstrate that the labour market responds in the same way to economic recessions and economic contractions in the short-run while the long-run effect is asymmetric.…”

Section: Y +1% Y -1% Differencesupporting

confidence: 91%

On the Unemployment Output Relation in South Africa: A Non-Linear ARDL Approach

Mazorodze

Siddiq

2018

JEBS

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The central aim of this paper is to establish the asymmetric effects of cyclical output on South Africa's unemployment rate. To achieve this objective, the non-linear autoregressive distributed lag model (NARDL) is applied on quarterly data spanning the periods 1994Q1-2017Q4. For every 10% economic contraction and expansion respectively according to the results, the response of the labour market is asymmetric in the long-run in that it loses more workers during contraction (10.3%) than it employs during recoveries (8%) supporting the labour market hysteresis. This is particularly true post the 2009 Global crisis suggesting that firms might have become more risk-averse to short-lived recoveries in recent years. The weak response of the labour market during expansions supports IMFâ€™s recent proposition that economic recovery alone may not be enough to address South Africa's unemployment problem.

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Section: Y +1% Y -1% Differencesupporting

confidence: 91%

On the Unemployment Output Relation in South Africa: A Non-Linear ARDL Approach

Mazorodze

Siddiq

2018

JEBS

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“…To our best knowledge, no study simultaneously accounts for heterogeneity, cross-section dependence, and endogenous regressor(s) issues. 6 al., 2010), and differences and changes in labour market participation rates (see, e.g., Okun, 1962).…”

Section: Literature Reviewmentioning

confidence: 99%

“…The literature on Okun´s law at the national is vast. One of the main findings of these papers is that Okun´s coefficient may differ considerably from country to country 6 and may change over time. 7 The main factors behind country differences in (and time variability of) Okun´s coefficients are related to structural differences (changes) in labour markets, such as flexibility and security of employment and unemployment benefits (Balakrishnan et al, 2010; Ball et al, 2013), different phases of economic cycles and economic shocks (Balakrishnan et coefficient) estimate.…”

Section: Literature Reviewmentioning

confidence: 99%

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A Regional Panel Approach to Testing the Validity of Okun'S Law: The Case of Slovenia

Dajčman¹

2018

ECECSR

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This paper aims to study the validity of Okun´s law for Slovenia at the national and regional level applying panel data. Different panel data and panel-time series model estimators are applied to test the sensitivity of results to the issues of heterogeneity, cross-section dependence, and endogeneity of regressors. We find that Okun´s law is valid for Slovenia and 6 out of 12 of its regions. The results imply that all major issues listed in the time-series panel literature should be addressed when estimating Okun´s coefficient with panel data.This paper uses regional data on the unemployment rate and output in Slovenia for 2000-2015 to estimate Okun´s coefficient for Slovenia and each of its NUTS 3-level regions. The difference and gap models for calculation of Okun´scoefficient are estimated using estimators that allow for different levels of robustness to the main issues of time-series panel models: the fixed effects (FE) and mean group (MG) proposed by Pesaran and Smith (1995), the CCEMG proposed by Pesaran (2006), and the common correlated mean group two-stage least squares model specification (CCEMG-2SLS) proposed by Neal (2015). Applying the estimators allows us to evaluate the extent to which Okun´s coefficient is affected by the panel time series issues of heterogeneity, crosssection dependence and endogeneity of regressors.The paper is organized in five sections. After the introduction, a brief literature review is provided, followed by a description of the methodology applied. Presentation of data and the results follows in the fourth section, while the fifth section concludes the paper.

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“…This is likely a result of these three countries having less regulation on labor markets, allowing companies to lay off workers easier when there is a slowdown in the economy. Cevik et al (2013) examine the presence of asymmetry in Okun's Law for nine transition economies. They find recoveries entail poor job growth in most transition economies.…”

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confidence: 99%

Okun’s law: evidence of 13 selected developed countries

Mustafa

2015

J Econ Finan

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This paper re-examines the validity of Okun's Law for 13 selected developed countries over 1970-2013. λ max and λ trace tests reveal cointegrating relationship between unemployment rate and real GDP growth in all countries except Germany. However, dynamic OLS estimates portray a somewhat different picture. The estimates of bivariate error-correction model (ECM) unveil that Okun's Law is quite valid only for the USA and South Korea. At the same time, evidence is relatively weaker for

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Asymmetry in the Unemployment–Output Relationship Over the Business Cycle: Evidence from Transition Economies

Cited by 30 publications

References 36 publications

On the Unemployment Output Relation in South Africa: A Non-Linear ARDL Approach

On the Unemployment Output Relation in South Africa: A Non-Linear ARDL Approach

A Regional Panel Approach to Testing the Validity of Okun'S Law: The Case of Slovenia

Okun’s law: evidence of 13 selected developed countries

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