Revisiting Hysteresis in Unemployment for Ten European Countries : Panel Unit Root Tests

Abstract

The hysteresis hypothesis in unemployment for ten European countries is tested using the Levin and Lin (1992), Im et al., (1997), Taylor and Sarno (1998) and Breuer et al., (2001) panel-based unit root tests for the 1961-1999 period. The results from the first three tests provide strong evidence in support of the hysteresis hypothesis given the European countries' unemployment data. The hypothesis is also confirmed for all the European countries except Belgium and the Netherlands when Breuer et al.'s (2001) SURADF test is conducted.