Hysteresis and sluggishness in Portuguese unemployment 1977–88

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Abstract

The phenomenon of unemployment persistence led to the development of alternative theories of unemployment. Among these the ‘hysteresis’ concept by Blanchard and Summers (1987) received a wide interest. Based on this notion we developed a generalized model that nests Blanchards and Summers’ theory. Using this framework we conducted an empirical investigation for the Portuguese labour market (1977–88). The results obtained point towards the existence of labour demand sluggishness, wage inertia and unemployment hysteresis. The model also suggests the existence of a rather inelastic labour demand curve.
Original languageEnglish
Pages (from-to)197-207
Number of pages11
JournalInternational Review of Applied Economics
Volume7
Issue number2
DOIs
Publication statusPublished - 1993

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