Skip to main content
Article thumbnail
Location of Repository

New Revelations about Unemployment Persistence in Spain

By Luis Alberiko Gil-Alana and Pedro Garcia-del-Barrio


This paper aims to re-examine the persistence of unemployment in Spain. For this purpose, we use time series and cross-section analysis. From a time series viewpoint we disaggregate unemployment by regions, and use unit root tests, AR coefficients and fractional differencing parameters as indicators of persistence. For the cross-section approach, we first estimate mean regressions of regional unemployment rates. Then, using a panel of 114 periods and 50 provinces, we estimate pooled, fixed and random effects models. Finally, following some recent developments, we implement several panel data unit root tests. Previous studies had already shown the strong persistence of Spanish unemployment. Our disaggregated analysis extends that finding to reveal that the persistence is greater in the most industrialised regions. The results also suggest that a structural break took place in 1994, implying a decline in the unemployment persistence since then.

OAI identifier:

Suggested articles


  1. (1995). 0.956 a Rejections of the null hypothesis d = 1 in favour of d > 1. (Also in bold) b Rejections of the null hypothesis d = 1 in favour of d < 1. FIGURE 2 Estimates of d based on the Whittle semiparametric approach of Robinson
  2. (1997). A micro approach to the issue of hysteresis in unemployment; evidence from the 1988-1990 labour market activity survey”, Bank of Canada, Working Papers 97-12.
  3. (1973). An exponential model in the spectrum of a scalar time series,
  4. (2003). b Adjusted t-statistic, derived by LLC (2002), that obeys asymptotically the standard normal distribution.
  5. b The t- bar statistic, derived by Im-Pesaran-Sin (2003), converges in probability to a standard normal distribution.
  6. (1998). Change-point estimation of fractionally integrated processes,
  7. (2005). Country of study: Spain in EMU: a virtuous long-lasting cycle? Occasional Papers nº 14,
  8. (1983). Diagnostics for heteroscedasticity in regression,
  9. (1979). Distributions of the estimators for autoregressive time series with a unit root,
  10. (1999). Does unemployment cause unemployment? Micro evidence from Norway,
  11. (1996). Efficient tests for an autoregressive unit root,
  12. (1994). Efficient tests of nonstationary hypotheses,
  13. (1996). Explaining the dynamics of Spanish unemployment, Working Paper in Economics, no.96/14,
  14. (2003). Fixed-Term Contracts and the Duration Distribution of Unemployment,
  15. (1995). Gaussian semi-parametric estimation of long range dependence,
  16. (1986). Hysteresis and the European unemployment problem,
  17. (1989). Hysteresis in history. Was there ever a Phillips curve?
  18. (1996). Hysteresis in the Canadian labour market. Evidence from the 1990s, Research
  19. (1987). Hysteresis in Unemployment,
  20. (1997). Hysteresis in unemployment. Evidence from 48 states,
  21. (1992). Illusive persitence in German unemployment,
  22. (1997). Is there a unit root in the inflation rate? Evidence from sequential break and panel data models,
  23. (2004). Long memory or structural change: Testing method and empirical examination,
  24. (1996). Measuring hysteresis in unemployment rates with long memory models, Working Paper,
  25. (2002). Modelling the Persistence of Unemployment in Canada,
  26. (1968). Money-Wage Dynamics and Labor-Market Equilibrium,
  27. (1991). On the causes of hysteresis in long term unemployment in the Netherlands,
  28. (1991). On the power of Dickey-Fuller tests against fractional alternatives,
  29. (1996). On the power of the KPSS test of stationarity against fractionally integrated alternatives,
  30. (1967). Philips Curves,
  31. (1991). Pitfalls and opportunities. What macroeconomists should known about unit roots,
  32. (1976). q is the UR in the starting period q, and ∆tu i is the variation of the UR over the following t periods. TABLE 6 Spanish unemployment persistence. Panel data estimations (1976q3-2004q4) (1) (2) (3) (4) (5) (6) Variables
  33. (1992). Regional evolutions.
  34. (1998). Regional unemployment persistence
  35. (1982). Sectoral Shifts and Cyclical Unemployment,
  36. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations,
  37. (1995). Spanish unemployment: Is there a solution?, London: Centre for Economic Policy Research.
  38. (2002). Spurious rejection using Dickey-Fuller tests,
  39. (1989). Test for unit roots; A Monte Carlo investigation,
  40. (2003). Testing for unit root in heterogeneous panels,
  41. (1993). Testing for unit roots and persistence in OECD unemployment rates,
  42. (1997). The causes of Spanish unemployment; a structural VAR approach,
  43. (1998). The impact of the early 1980s recession on British regional unemployment
  44. (2003). The persistence of regional unemployment: evidence from China,
  45. (2001). The Persistence of Unemployment
  46. (1988). The persistence of unemployment,
  47. (1992). The power problems of unit root tests in time series with autoregressive errors,
  48. (1997). The role of demand management policies in reducing unemployment,
  49. (1968). The Role of Monetary Policy,
  50. (2002). Unemployment and input prices. A fractional cointegration approach,
  51. (2000). Unemployment hysteresis in the US states and the EU. A panel approach,
  52. (2005). Unemployment in Spain: An analysis of labor mobility and young adult unemployment. Working paper,
  53. (2003). Unemployment Persistence of Different Labour Force Groups in Finland;
  54. (2004). Unemployment, hysteresis and transition,
  55. (1995). Wage Inequality and Unemployment:

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.