Natural Rate Of Unemployment Research Articles

Nigeria’s Hegemony in West Africa – Counting the Cost

The aim of this study is to examine Nigeria’s hegemony in West Africa and its implications on Nigeria’s national core development programmes. This is done via critical examination of some selected regional and national development indicators with a view to fi nd ways of improving the overall national performance as signifi cant contribution to regional development. On political impact, the study found that successive Nigerian governments were engrossed in unprecedented national corruption than development, diverting billions of dollars meant for national development in the guise of national security, regional peacekeeping, humanitarian intervention and socio-economic development of the sub region. The consequences of such political ineptitude were widespread: failed leadership, clientelism, rentierism, political apathy, escalating national insecurity, wide-spread poverty and unemployment and poor macroeconomic development. Overall, the study opines that Nigeria should shore up greater commitment and responsibility towards her national and human capital development, massively improve the infrastructure, reorientate both military and political elites to ensure integral national growth, overhaul her regional and foreign policy goals to meet her national interest goals as true catalyst for regional development.

THE PLACE OF AN ETHICS OF SOLIDARITY IN MITIGATING THE PROBLEM OF UNEMPLOYMENT IN SUB-SAHARAN AFRICA

Sub-Saharan Africa like some other parts of the world is plagued by myriads of problems such as environmental degradation, climate change, illegal migration, human trafficking, terrorism, resources conflicts, bad and inept leadership, failing states, armed banditry, drug smuggling, youth restiveness, unemployment, etc. One of these problems, unemployment, has led to the devastation of many human lives and equally made some persons to live in degrading manner that affect environmental resources. Unemployment is not simply about statistics or numbers but about actual human lives who are holders of rights and dignity. Unemployment can impede the exercise of human rights and prevent people from living meaningful lives. In spite of the region’s enormous natural resources and human capital unemployment remains drastically unabated. Why is this situation so? This situation is problematized here. Consequently, this paper critically and analytically examines this problem of unemployment in Sub-Saharan Africa in the light of an ethics of solidarity. The paper hermeneutically interprets the concepts involved in the study. The grave reasons for unemployment in the region will be examined with likely solutions. Besides these possible solutions, the paper sees the issue as also bordering on ethical realities. Many of the factors that causes employment borders on human behaviours and morality. There are ethical dimensions to the issue then. This is why the paper takes the vantage point of an ethics of solidarity to argue for an additional solution to the problem. This is equally the theoretical frame from which the problem of unemployment is examined. Living in solidarity makes individuals to easily collaborate and overcome societal problems like unemployment. The paper finds that unemployment is a pervasive problem in the sub-continent and is causing grave consequences for both human lives and the environment. The paper concludes that an ethics of solidarity can help in mitigating the problem of unemployment in the sub-continent. And that when this is done it will help to create a happier and peaceful sub-continent.

Why Has Wage Growth Been Subdued in the Advanced Foreign Economies?

This note argues that certain factors, especially slower productivity growth and lower natural rates of unemployment, can explain much of the weakness of wage growth and the apparent breakdown of the simple wage Phillips curve.

Dynamic Beveridge Curve Accounting

We develop a dynamic decomposition of the empirical Beveridge curve, i.e., the level of vacancies conditional on unemployment. Using a standard model, we show that three factors can shift the Beveridge curve: reduced-form matching efficiency, changes in the job separation rate, and out-of-steady-state dynamics. We find that the shift in the Beveridge curve during and after the Great Recession was due to all three factors, and each factor taken separately had a large effect. Comparing the pre-2010 period to the post-2010 period, a fall in matching efficiency and out-of-steady-state dynamics both pushed the curve upward, while the changes in the separation rate pushed the curve downward. The net effect was the observed upward shift in vacancies given unemployment. In previous recessions changes in matching efficiency were relatively unimportant, while dynamics and the separation rate had more impact. Thus, the unusual feature of the Great Recession was the deterioration in matching efficiency, while separations and dynamics have played significant, partially offsetting roles in most downturns. The importance of these latter two margins contrasts with much of the literature, which abstracts from one or both of them. We show that these factors affect the slope of the empirical Beveridge curve, an important quantity in recent welfare analyses estimating the natural rate of unemployment.

Testing the hysteresis effect in the US state-level unemployment series

ABSTRACT This paper re-examines the stochastic time series behaviour of the monthly unemployment rate in 50 states of the United States (US) for the period 1976–2017 using a number of state-of-the-art unit root tests. The new developments incorporate structural break, nonlinearity, asymmetry, and cross-sectional correlation within panel-data estimation including the use of a sequential panel selection method. While not previously considered, sequential panel selection enabled us to determine and separate the stationary and nonstationary series in the sample. The empirical findings are in support of the stationarity of unemployment rate in 47 states. The findings confirm a natural rate hypothesis for the labour markets in the most US states, indicating that labour market shocks have solely temporary effects on state-level unemployment. This empirical study provides significant state-specific policy implications.

Climate Hysteresis and Monetary Policy

Since the birth of the natural rate hypothesis, the conventional notion that short-term output simply fluctuates around a relatively stable long-term trend became the norm in modern macroeconomics, including in the standard New Keynesian DSGE model. However, the global financial crisis (GFC) led to a serious rethinking of this norm, giving rise to the re-emergence of the Blanchard-Summers’ hysteresis debate and a new business cycle paradigm in which the short-term output effects of financial crises permanently feed into long-term growth trends. Using a Bayesian-estimated structural multivariate filtering model calibrated to data for Australia and the United States, the innovation of this paper is the incorporation of climate hysteresis into the estimation of potential output and the output and unemployment gaps. The results suggest non-trivia implications for monetary policy in a carbon-constrained world. Not only are the model-based estimates of potential output and NAIRU more volatile with climate shock persistence, the climate-neutral output and unemployment gap estimates are much smaller than conventional estimates, with different implications for inflation signals during the upturn or downturn of the business cycle. For economies that are more susceptible to disruptive climate shocks, especially in the developing world, an environment in which both demand conditions and the underlying supply potential are rapidly changing will severely complicate the conduct of forward-looking macroeconomic policy.

The Impacts of COVID-19 on Minority Unemployment: First Evidence from April 2020 CPS Microdata

COVID-19 abruptly impacted the labor market with the unemployment rate jumping to 14.7 percent less than two months after state governments began adopting social distancing measures. Unemployment of this magnitude has not been seen since the Great Depression. This paper provides the first study of how the pandemic impacted minority unemployment using CPS microdata through April 2020. African-Americans experienced an increase in unemployment to 16.6 percent, less than anticipated based on previous recessions. In contrast, Latinx, with an unemployment rate of 18.2 percent, were disproportionately hard hit by COVID-19. Adjusting for concerns of the BLS regarding misclassification of unemployment, we create an upper-bound measure of the national unemployment rate of 26.5 percent, which is higher than the peak observed in the Great Depression. The April 2020 upper-bound unemployment rates are an alarming 31.8 percent for blacks and 31.4 percent for Latinx. Difference-in-difference estimates suggest that blacks were, at most, only slightly disproportionately impacted by COVID-19. Non-linear decomposition estimates indicate that a slightly favorable industry distribution partly protected them being hit harder by COVID-19. The most impacted group are Latinx. Difference-in-difference estimates unequivocally indicate that Latinx were disproportionately impacted by COVID-19. An unfavorable occupational distribution and lower skills contributed to why Latinx experienced much higher unemployment rates than whites. These findings of early impacts of COVID-19 on unemployment raise important concerns about long-term economic effects for minorities.

Is It the Natural Rate Hypothesis or the Hysteresis Hypothesis for Unemployment Rates in Newly Industrialized Economies?

The focus of our study is on determining whether unemployment rates in 8 New Industrialized Economies conform to the natural rate hypothesis or the hysteresis hypothesis. To this end, we employ a variety of unit of unit root testing procedures to quarterly data collected between 2002:q1 and 2017:q1. Summarizing of our findings, conventional unit root tests which account neither for asymmetries nor structural breaks produce the most inconclusive results. On the other hand, tests which incorporate structural breaks while ignoring asymmetries tends to favour the natural rate hypothesis for our panel of countries. However, simultaneously accounting for asymmetries and unobserved structural breaks seemingly produces the most robust findings and confirms hysteresis in all unemployment rates except for Asian economies/countries of Thailand and the Philippines.

HOW MAINSTREAM ECONOMISTS EXPLAIN (OR NOT) UNEMPLOYMENT?

One of the tasks assigned to mainstream economists is to legitimize the significance of unemployment. This paper aims to reconstruct the evolution of their approaches from the theoretical impossibility asserted by Pigou to the recognition of involuntary unemployment by Keynes and eventually to different versions of the natural unemployment rate. The unemployment rate had become an instrument for fine-tuning of the economy, but it no longer fulfills this role. It is then the whole dominant macroeconomics that is shaken to its foundations. But this crisis might help to return to expansionary fiscal policies (a Green New Deal) and to the Job Guarantee, thus echoing Keynes’ question: ‘There is work to do; there are men to do it. Why not bring them together?’

Labor Market Analysis of the U.S.A and Eurozone; Similarities, Differences, and Reasons behind Them

The significant amount of well-organized and deeply-researched scholarly articles standing to the macroeconomic theories comes to define the labor market, which is also known as “job market”, a place where the supply side of the model comes from employees seeking for the best job while the demand side represents the employers who are mainly interested in skill-match and productivity of whom they hire for their industry. In the labor market, the equilibrium wage rate is determined at the intersection point of Wage-setting and Price-setting relation which pinpoints the relative wage on the vertical axis and the natural rate of unemployment on the horizontal axis in R^2. In order to comprehensively picture the labor market and its preliminary indicators that can be considered as the unemployment rate, and labor force participation rate, the macroeconomic perspective must be introduced in such a way that the role of investors, policymakers, and participants of the model is imaginable. In view of that, this small-scoped research conducted considers trade reforms, labor market outcomes, foreign competition, and labor market adjustment as well as the effect of the economic and financial crisis to scrutinize the current labor market conditions, similarities, and differences in the U.S.A and Eurozone respectively.

The Impact of Foreign Direct Investment on Unemployment: Evidence from Arab countries

Theoretically, foreign direct investment (FDI) has the ability to solve a number of economic and social problems. Reducing unemployment is at the forefront of these problems. Empirical studies did not agree on the inevitability of the positive macroeconomic impact of FDI on reducing unemployment. In this paper, the macroeconomic impact of FDI on national unemployment rates in general and youth unemployment in particular is examined in 8 Arab countries. In estimating the model, a panel unit root, panel cointegration, and Granger causality tests are used. The positive impact of FDI on reducing national unemployment is proven in the group as a whole and individually in Jordan, Morocco, and Tunisia while it leads to increase unemployment in Egypt. The impact of FDI on reducing youth unemployment is not proven. The causal relationship in both directions between FDI and unemployment and the speed of adjustment towards the long-term equilibrium is not proven.

Evidence on Rule Manipulation and Moral Hazard in the Brazilian Unemployment Insurance Program

This article aims to examine the existence of rule manipulation and moral hazard in the Brazilian Unemployment Insurance Program. For empirical analysis, the rule manipulation test by Cattaneo, Janson and Ma (2016) was used, as well as fuzzy and sharp regression discontinuity. The data was built using data from the National Employment and Unemployment Survey from January 2008 to June 2014 due to the greater homogeneity of the rules for benefit access. Based on the results, the program is an influence on the length of employment of Brazilian workers given the existence of rule manipulation, assessed by the length of stay in the last job. Furthermore, it was found that heads of families and their children were less likely to search for employment. This findings were corroborated when data from the program beneficiaries only was assessed, showing a lower job search probability, between -21.80 p.p. and -15.08 p.p. for the children, and between -39.40 p.p. and -28.50 p.p. for the heads of families. Thus, it is possible to confirm the existence of both rule manipulation the access of the program, as well as moral hazard, which points to the need to restructure the program, and above all, have less influence on the national labor market.

DIGITAL MARKETING SEBAGAI METODA ALTERNATIF WIRAUSAHA BAGI MAHASISWA DI UNIVERSITAS NEGERI PADANG

Digital technology and the internet have opened opportunities for people to develop social interaction through this technology, with the birth of web technology, media and social networks, which led to the industrial revolution 4.0. This technology presents a new trend in building a business called Digital Marketing (DM). DM provides new opportunities for anyone to do entrepreneurship without being limited by time, place and region. More than a decade of entrepreneurship has become the focus of attention of the government in Education, as one of the ways to reduce national unemployment. Universitas Negeri Padang (UNP) answers the entrepreneurship education policy by making Entrepreneurship as a compulsory subject, promoting entrepreneurial student programs and integrated service units for career guidance and entrepreneurship. This paper examines more deeply how DM can be used as an alternative method of entrepreneurship for UNP students, which has direct touching student life as a millennial generation. The experimental method is used to see of improvement the knowledge and skills of students in DM through DM Training and Development of DM eLearning Resources (DMLR). To measure the success of the program, instruments were developed before and after training, as well as a questionnaire to assess the results of the DMLR development. The results of this study showed an increase in student knowledge and skills in DM and a good assessment of the developed DMLR.

Switching to Self-Employed When Heading for Retirement.

Self-employment allows individuals to extend their working lives instead of accepting forced retirement. This study examines transitions to self-employment after age 50 but before retirement age. The study is based on data from Survey of Health, Ageing and Retirement in Europe (SHARE), in which 16,412 people from 18 countries contributed 24,583 observations. Multilevel analyses were used; the data were pooled into one dataset, in which individuals (first-level variables) were nested within countries (second-level variables). The results reveal that few employees choose to switch to self-employment between age 50 and retirement. Characteristics such as health limitations, marital status, and national unemployment rates affect these employees' decisions to become self-employed. Given the wage gaps between salaried employees and self-employed and the few employment opportunities available to salaried employees after they reach the official retirement age, the transition to self-employment is a solution for those who need sources of income or wish to remain active after retirement age.

Economic Growth and Unemployment Nexus in USA

Empirical relationship between unemployment and growth is not pronounced as we investigate the economic scenario of the nations. Author attempted to relate US unemployment rate to the growth during 1948-2016 by using bivariate and log regression models, Bai-Perron Model, Granger Causality test, Johansen cointegration test, vector auto regression and vector error correction models. Even, author also verified relationship between unemployment gap, output gap and growth in USA during the same period. Data on US unemployment rate, GDP and growth rate have been taken from Bureau of US census during 1948-2016. Data on US natural rate of unemployment was taken from Fed Bank of St.Louis from 1949 to 2016.The paper concludes that US unemployment rate is increasing at the rate of 0.507 per cent per annum and it has upward structural break in 1971.The nexus follows the Okun’s law in USA. US unemployment is negatively related with growth rate during 1948-2016.Their relationships are causal and cointegrated. VAR model is stable and stationary. Residual test showed non-normality and autocorrelations.Moreover, author showed negative relation between growth and unemployment gap in USA during 1949-2016.They have no causality and cointegration. Their VAR model is stable and stationary. The residual test proved non-normality and auto-correlation problems. Perceptible output gap influences unemployment gap negatively during 1949-2016 .It has significant bi-directional causality and one cointegrating equation. In Vector error correction model, error corrections are significant with high speed having stability, autocorrelation and non-normality. The rate of decline in unemployment rate due to increased growth rate in USA during 1948-2016 was marginal.

The interplay between national and parental unemployment in relation to adolescent life satisfaction in 27 countries: analyses of repeated cross-sectional school surveys

BackgroundPrevious research shows that parental unemployment is associated with low life satisfaction in adolescents. It is unclear whether this translates to an association between national unemployment and adolescent life satisfaction, and whether such a contextual association is entirely explained by parental unemployment, or if it changes as a function thereof. For adults, associations have been shown between unemployment and mental health, including that national unemployment can affect mental health and life satisfaction of both the employed and the unemployed, but to different degrees. The aim of this paper is to analyse how national unemployment levels are related to adolescent life satisfaction, across countries as well as over time within a country, and to what extent and in what ways such an association depends on whether the individual’s own parents are unemployed or not.MethodsRepeated cross-sectional data on adolescents’ (aged 11, 13 and 15 years, n = 386,402) life satisfaction and parental unemployment were collected in the Health Behaviour in School-aged Children (HBSC) survey, in 27 countries and 74 country-years, across 2001/02, 2005/06 and 2009/10 survey cycles. We linked this data to national harmonised unemployment rates provided by OECD and tested their associations using multilevel linear regression, including interaction terms between national and parental unemployment.ResultsHigher national unemployment rates were related to lower adolescent life satisfaction, cross-sectionally between countries but not over time within countries. The verified association was significant for adolescents with and without unemployed parents, but stronger so in adolescents with unemployed fathers or both parents unemployed. Having an unemployed father, mother och both parents was in itself related to lower life satisfaction.ConclusionLiving in a country with higher national unemployment seems to be related to lower adolescent life satisfaction, whether parents are unemployed or not, although stronger among adolescents where the father or both parents are unemployed. However, variation in unemployment over the years did not show an association with adolescent life satisfaction.

The impact of the output gap on the unemployment rate: evidence from Mexico, 1987q1-2018q4

Using quarterly data for Mexico from 1987Q1 to 2018Q4, we measure the impact of output gap on the unemployment rate based on a State-Space model with time-varying coefficients. From an econometric modeling point of view, this model allows asymmetrical interactions between the output gap and unemployment rate. Our principal conclusions are: 1) The long-term equilibrium unemployment rate is equal to 3.06; 2) the unemployment rate does not exhibit hysteresis; 3) when GDP is lower than potential output, the impact of its growth on the unemployment rate is -0.43 percent points; and 4) when GDP is higher than potential output, the impact of its growth on the unemployment rate is close to zero. It implies that the reaction of the unemployment rate to output gap is different when the output gap is increasing from that when the output gap is decreasing; i.e., the output gap does not have the same effect on the unemployment rate over time.

The Output Gap and Youth Unemployment: An Analysis Based on Okun’s Law

The impact of economic fluctuations on the total unemployment rate is widely studied, however, with respect to age- and gender-specific unemployment, this relationship is not so well examined. We apply the gap version of Okun’s law, aiming to estimate youth unemployment rate sensitivity to output deviations from its potential level. Additionally, we aim to compare whether men or women have a higher equilibrium unemployment rate when output is at the potential level. Contrary to most studies on age- and gender-specific Okun’s coefficients, which assume that the effect of output on unemployment is homogenous, we allow a different effect to occur, depending on the output gap’s sign (positive/negative). The focus of the analysis is on 28 EU countries over the period of 2000–2018. The model is estimated by least squares dummy variable estimator (LSDV), using Prais–Winsten standard errors. We did not find evidence that higher equilibrium unemployment rates are more typical for men or for women. The estimates clearly show the equilibrium level of youth unemployment to be well above that of total unemployment, and this conclusion holds for both genders. We assess greater youth unemployment sensitivity to negative output shock, rather than to positive output shock, but when we take confidence intervals into consideration, this conclusion becomes less obvious.

Labour market fluidity and employment outcomes in Colombia: Evidence from employer-employee linked data

Labour market flexibility has been a traditional subject of study in labour economics; recent literature has focused on the related concept of fluidity, broadly understood as the mobility of workers and jobs in the labour market. Here, we compute standard measures of fluidity for the Colombian urban labour market, finding evidence of increased fluidity, especially after 2010. Recent developments in equilibrium unemployment models predict, in general settings, a negative relationship between some fluidity measures and the equilibrium rate of unemployment. Recent literature on worker and job flows has identified benign aspects of fluidity, in that fluid labour markets are expected to have shorter average unemployment duration. We find evidence for a positive effect of fluidity on different employment and occupation indices using instrumental variable regression models that exploit variations in labour market outcomes and fluidity measures over time.

A Positive Theory of Monetary Policy in a Natural Rate Model

A Positive Theory of Monetary Policy in a Natural Rate Model