Unemployment in the OECD: Models and Mysteries

44 Pages Posted: 16 Jun 2004

See all articles by P. N. Raja Junankar

P. N. Raja Junankar

Western Sydney University - Department of Economics & Finance; University of New South Wales (UNSW) - Industrial Relations Centre; IZA Institute of Labor Economics

Jakob B. Madsen

University of Copenhagen - Department of Economics

Date Written: June 2004

Abstract

This paper compares models used to explain OECD unemployment. The models suggest that the natural rate of unemployment has been driven up mainly by wage push factors. Panel data on twenty-two OECD countries are used to investigate the explanatory power of these models over the past two decades. Our estimates reveal that coefficients on key variables often turn out with signs which are at odds with the theories or are insignificant and that a second order autoregressive model performs nearly as well as all the other models. The conclusion offers some directions for future research.

Keywords: unemployment, natural rate, supply shocks, hystere

JEL Classification: E24, J64, C52

Suggested Citation

Junankar, P. N. Raja and Madsen, Jakob Bruechner, Unemployment in the OECD: Models and Mysteries (June 2004). Available at SSRN: https://ssrn.com/abstract=556144

P. N. Raja Junankar (Contact Author)

Western Sydney University - Department of Economics & Finance ( email )

Sydney, NSW 1797
Australia

University of New South Wales (UNSW) - Industrial Relations Centre

Kensington
High St
Sydney, NSW 2052
Australia

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jakob Bruechner Madsen

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark

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