Does the Unemployment Invariance Hypothesis Hold in South Africa?

Gumata, Nombulelo; Ndou, Eliphas

doi:10.1007/978-3-319-66520-7_3

Cited by 4 publications

(6 citation statements)

References 5 publications

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“…This implies that any policy that alters labour force, capital stock or productivity will not influence the long-run unemployment rate. Evidence for the support of this hypothesis was first provided by Layard et al (1991) for the United Kingdom, followed by other empirical studies for Turkey (Tansel et al, 2016a), Romania (Otoiu and Titan, 2016), Australia (Ngyen Va, 2016), Canada (Tansel et al, 2016b) and South Africa (Gumata and Ndou, 2017). Altuzarra et al (2019) also provided evidence for the hypothesis in Spain, but only with the aggregate and the male gender dataset while the findings on the female gender dataset failed to support the UIH.…”

Section: Literature Reviewmentioning

confidence: 90%

“…It is instructive to note that the divergence in the findings on the long-run relationship between labour force participation and unemployment across countries is a pointer to the need for further probe on the nexus, which is a focus of this study. It is also pertinent to note that few empirical studies exist on this issue in the context of African countries (Gumata and Ndou, 2017). Therefore, this study seeks to fill this gap as it empirically investigates the longrun relationship between unemployment and labour force participation in Africa and its five regions using a macro-level approach.…”

Section: Source(s): World Development Indicators (2019)mentioning

confidence: 99%

“…The rise in labour force participation in the midst of increasing unemployment rate in most of the Southern Africa region is in line with the findings of Lee and Parasnis (2014) that dominance of UIH exist in the developing countries. The UIH in Southern Africa could also mean that the unemployment rate effect is counterbalanced by labour market responses in the region like wage settings as well as labour demand and supply, as suggested by Gumata and Ndou (2017). Labour force participation and unemployment…”

Section: Long-run Response Of Labour Force Participation Rate To Unem...mentioning

confidence: 99%

“…Studies by Karanassou and Snower (2004), € Osterholm (2010), Emerson (2011), Kakinaka and Miyamoto (2012) and Tansel et al (2016b) for the UK, Sweden, the US, Japan and Canada, respectively, support discouraged worker effects hypothesis, while the studies by Layard et al (1991), Tansel et al (2016a), Otoiu and Titan (2016) and Ngyen Va (2016) for the UK, Turkey, Romania and Australia, respectively, support UIH. Most importantly, these studies only focused on countries that are not of African origin, suggesting that such studies are limited in Africa, except for South Africa (Gumata and Ndou, 2017).…”

Section: Introductionmentioning

confidence: 99%

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Labour force participation and unemployment rate: does discouraged worker effect hypothesis or unemployment invariance hypothesis hold in Africa?

Raifu

Adeboje²

2022

AJEMS

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PurposeThe purpose of this study is to examine the existence of discouraged worker effect hypothesis and unemployment invariance hypothesis in Africa, including its five regional groups. Specifically, the study tests the existence of co-integration between different categories of labour force participation and unemployment rate, total male and female labour force participation and the unemployment rate for age brackets 15–24, 15–64 and 15+, respectively.Design/methodology/approachThe study uses the data of 52 countries in Africa which cover the period from 1991 to 2018. Three co-integration estimation techniques namely, the Kao co-integration test, Pedroni co-integration test and Westerlund co-integration test are used to validate the existence of co-integration between the labour force participation and unemployment rate. The dynamic ordinary least square is further used to explore the impact of the unemployment rate on labour force participation, while the pooled ordinary least squares (POLS) that accounts for individual country and time effects is employed for robustness check.FindingsExcept for Southern Africa, it is found that the discouraged worker effect hypothesis holds in Africa and the rest of its regions. This suggests that there is a long-run relationship between labour force participation rate and unemployment rate irrespective of age group and gender classifications. To some extent, the authors discover the existence of cross-sectional dependence in the panel. There is also an inverse relationship between labour force participation and the unemployment rate. This implies that when the unemployment rate is high, labour force participation tends to decline. The results are, however, sensitive to the choice of estimation method.Research limitations/implicationsThe study is limited to the examination of linear co-integration between labour force participation and the unemployment rate in Africa and its five regions. The future study can investigate the possibility of a nonlinear or an asymmetric relationship between labour for participation and the unemployment rate.Social implicationsThus, a policy framework that would generate employment creation is greatly required in Africa.Originality/valueTo the best of the authors’ knowledge, this is a pioneer work that addresses the issue of co-integration between labour force participation and unemployment rate for Africa and its five regions taking into consideration gender and age brackets of labour force participation and unemployment.

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Section: Literature Reviewmentioning

confidence: 90%

Section: Source(s): World Development Indicators (2019)mentioning

confidence: 99%

Section: Long-run Response Of Labour Force Participation Rate To Unem...mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Labour force participation and unemployment rate: does discouraged worker effect hypothesis or unemployment invariance hypothesis hold in Africa?

Raifu

Adeboje²

2022

AJEMS

View full text Add to dashboard Cite

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“…The analysis of the relationship between unemployment and participation rate has been a growing concern for national and regional governments when designing labor market policies. On the one hand, the discouraged-worker effect changes the labor force participation over time and over business cycles, so that the informational value of the unemployment rate may be unreliable as an indicator of the labor market situation (Tansel & Ozdemir, 2018).On the other hand, the unemployment invariance hypothesis asserts that any exogenous permanent shock in the total factor productivity, capital stock, or labor force supply has no effect on the long-run unemployment rate (Karanassou & Snower, 2004), because the external effects are offset by the labor market responses such as wage settings or labor demand and supply (Gumata & Ndou, 2017).…”

Section: Introductionmentioning

confidence: 99%

The Unemployment-Labor Force Participation Linkage in Iran's Women Labor Market

2020

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Purpose-During recent years, the long-run relationship between the unemployment rate and the labor force participation rate has been examined in depth in developed and developing economies. This paper explores this relationship for Iranian women in 31 provinces from 2005Q2 to 2019Q1. Approach-In order to examine the existence of a long-run relationship between female LFP and UR, the time series cointegration approach has been used. Furthermore, regarding the low power of the univariate cointegration approach, we consider a panel version of the cointegration tests developed by Westerlund (2006). Findings-The findings show that in 25 provinces there is no long-run equilibrium relationship between female unemployment and participation rate. The results of the panel cointegration test also reveal no long-run relationship between the two variables. Therefore, the unemployment invariance hypothesis is supported for the case of women in Iran. Originality/Value-This study investigates whether the unemployment invariance hypothesis holds for Iran which it has not been analyzed before for the Iranian labor market. Moreover, the study adopts a regional approach, which takes into account the huge regional differences in Iran.

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The unemployment–labor force participation linkage in Iran’s women labor market

Cheratian

Goltabar

Calá

2022

IJDI

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Purpose During recent years, the long-run relationship between the unemployment rate (UR) and the labor force participation (LFP) rate has been examined in-depth in developed and developing economies. This paper aims to explore this relationship for Iranian women in 31 provinces from 2005Q2 to 2019Q1. Design/methodology/approach To examine the existence of a long-run relationship between female LFP and UR, the time-series cointegration approach has been used. Furthermore, regarding the low power of the univariate cointegration approach, the authors consider a panel version of the cointegration tests developed by Westerlund. Findings Both time-series cointegration tests and panel cointegration test support the unemployment invariance hypothesis for most Iranian provinces, especially the most religious ones. As it implies an invariance to supply side policies, it seems that reducing legal and cultural barriers could be more relevant to decrease female UR and increase LFP than training programs or R&D policies. The present results also suggest that, for this group of regions, a more centralized policy design could be appropriate, instead of a regional one. Originality/value This study investigates whether the unemployment invariance hypothesis holds for Iran, which has not been analyzed before for the Iranian labor market. Moreover, the study adopts a regional approach, which takes into account the huge regional differences in Iran.

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Does the Unemployment Invariance Hypothesis Hold in South Africa?

Cited by 4 publications

References 5 publications

Labour force participation and unemployment rate: does discouraged worker effect hypothesis or unemployment invariance hypothesis hold in Africa?

Labour force participation and unemployment rate: does discouraged worker effect hypothesis or unemployment invariance hypothesis hold in Africa?

The Unemployment-Labor Force Participation Linkage in Iran's Women Labor Market

The unemployment–labor force participation linkage in Iran’s women labor market

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