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UNEMPLOYMENT IN GREECE:

EVIDENCE FROM GREEK REGIONS

 

Dimitrios Bakas

University of Athens

 

Evangelia Papapetrou

Bank of Greece and University of Athens

ABSTRACT

The purpose of the paper is to examine the nature of Greek unemployment allowing for cross-sectional dependence among Greek regions and for the presence of structural breaks. The paper contributes to the literature assessing the stochastic properties of Greek regional unemployment rates using recently developed and more powerful panel unit-root tests, such as the Lagrange Multiplier (LM) panel unit root test of Im et al. (2010), that allow for level and trend breaks, heterogeneity and cross-sectional dependence in the panel. The results show that in all cases, after taking into account the fact that regional unemployment rates in Greece are subject to a structural break both in mean and the slope of the series, the null hypothesis of a unit root is not rejected, indicating that the Greek regional unemployment series are non-stationary with the presence of a structural break.

Keywords: Unemployment; Hysteresis; Panel unit root tests; Structural breaks; Cross-section dependence

JEL classification: C32; C33; E24; J64; R23

Acknowledgements: We would like to thank Heather Gibson for helpful comments and suggestions. We are also grateful to Professor Junsoo Lee for providing the GAUSS code used in this paper. The first author would like to thank the Greek State Scholarships Foundation (IKY) for financial support. The views expressed in this paper are those of the authors and not those of their respective institutions.

 

Correspondence:

Evangelia Papapetrou

Economic Research Department

Bank of Greece

21 El. Venizelou 102 50

Athens, Greece

Tel: +30 210 320 .2377

Fax: +30 210 323.3025

E-mail: epapapetrou@bankofgreece.gr

 

 

 

 


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