Hysteresis in unemployment: an empirical research for three member states of the European Union

This empirical paper investigates the hysteresis in unemployment in the case of three European countries namely Greece, Ireland and Portugal for the period 1984-2010. This study uses three classical unit-root tests, and a number of panel unit root tests, which are known to overcome specification problems, to check the existence of hysteresis in unemployment data from three European Union countries. The empirical results do not reject a unit root in the unemployment rates. This suggests that the unemployment hysteresis hypothesis exists in all three countries.