Working Paper Series no. 337: Short Note on the Unemployment Rate of the French Overseas regions

Abstract

This article analyzes the hysteresis hypothesis in the unemployment rates of the four French overseas regions (Guadeloupe, Martinique, Guyana, Reunion) [FORs] over the period 1993-2008. We use standard univariate and panel unit root tests, among them Choi (2006) and Lopez (2009) that account for cross-sectional dependence and have improved performance when the number of countries and the time dimension of the data are limited. Our results cannot reject the null hypothesis of a unit root and so find evidence supporting hysteresis in the unemployment rates for the FORs.

Jean François Hoarau, Claude Lopez and Michel Paul
July 2011

Classification JEL : C32, F31

Keywords : panel unit root, unemployment, hysteresis