Hysteresis in the Dynamics of Employment

Abstract

In this paper, we derive a micro model of employment demand with hysteresis whereby firms can adjust along an intensive (employment) and an extensive (hours of work) margin. A mechanism of aggregation over heterogeneous firms is used to generate the corresponding aggregate dynamics. Longitudinal micro monthly data on a representative sample of Portuguese manufacturing firms are used in the empirical analysis. Our results indicate that signs of hysteresis found at the micro level do not vanish completely by aggregation and that hysteresis is magnified by the existence of an additional margin of adjustment (the hours adjustment margin).

Macro‐Hysteresis Test for Brazilian Exports of Manufactured Products: A threshold Panel Approach

“… Studies by Blanchard and Summers (), De Vicenti (2001), and Mota et al () are examples of hysteresis applications in the field of labour economics. In the fields of economic growth and macroeconomics, see Cross () and Schoder ().…”

Play Hysteresis in Supply or in Demand as Part of a Market Model

“…99ff. ) and Mota et al (2012) use this linear play algorithm to estimate and to compare aggregate employment hysteresis with micro level adjustment patterns. Belke et al (2013) apply the algorithm empirically in order to estimate play dynamics for German exports.…”

“…and Mota et al . () use this linear play algorithm to estimate and to compare aggregate employment hysteresis with micro level adjustment patterns. Belke et al .…”

Exchange rate bands of inaction and play-hysteresis in Greek exports to the Euro Area, the US and Turkey: sectoral evidence

“…99 ff., and Mota et al (2012) use this linear playalgorithm to estimate and compare aggregate employment hysteresis with micro level adjustment patterns.…”

“…the exchange rate). Mota et al (2012) point out that OLS estimates are, in a time series econometrics sense, super-consistent, and can therefore be applied to estimate a spurt regression.…”