Does Unemployment Hysteresis Exist in Economy of Iran?
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Keywords

Unemployment, Hysteresis, Unit root tests, Structural breaks.

How to Cite

Eisazadeh, S. ., & Tabarsi, M. . (2013). Does Unemployment Hysteresis Exist in Economy of Iran?. International Journal of Asian Social Science, 3(8), 1717–1724. Retrieved from https://archive.aessweb.com/index.php/5007/article/view/2527

Abstract

This paper aims to investigate the unemployment hysteresis hypothesis for Iran, by using annual data of actual unemployment rate, during period 1959-2011. We first apply traditional methods of unit root test without considering structural breaks such as ADF and Phillips and Perron (1988) tests and fail to reject the hysteresis hypothesis in unemployment time series. When one structural break is incorporated, we again fail to reject hysteresis hypothesis. Since the mentioned tests have little power, we employ unit root tests that consider multiple structural breaks as analysis of the unemployment time series. Our empirical findings are consistent with the hysteresis hypothesis of unemployment.

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