Akademik Veri Yönetim Sistemi
Journal of the Knowledge Economy, 2025 (SSCI)
This study investigates unemployment hysteresis on the basis of structural dimensions of employment and supply and demand dynamics. Moreover, it is aimed to draw a road map for hysteresis policies by evaluating the dynamics of the employment structure, which is becoming more complex day by day, with the theoretical background and the developed approach. ARFIMA model findings prove unemployment hysteresis. Structural VAR findings of demand-side (money supply, inflation, Phillips Curve) and supply-side (labour cost) dynamics investigate the structural foundations of unemployment hysteresis. The ineffectiveness of demand-side policies on unemployment supports the hysteresis. Although inflation shocks prevent the increase in unemployment in the short run on the basis of the Phillips Curve, they are ineffective in the long run. The differentiation of the effects of supply and demand side dynamics in the short and long run provides satisfactory evidence for the importance of labour market frictions in terms of hysteresis. In this context, the high speed of adjustment of labour cost shocks in the short run is due to the loss of wage competition against abor. The long-run design of inflation developments (the most resilient shocks) through real wage erosion (by constraining aggregate demand) is another key finding for the structural functioning of the unemployment hysteresis. Moreover, our empirical support implies that real wage rigidity has evolved and changed its structure over the historical period. The findings for supply-side and demand-side variables are consistent with the basic theoretical characteristics of the variables. However, the more cumbersome movement of labour market frictions compared to demand-side variables may be misleading from a cyclical perspective. This is because even though the labour cost path has a horizontal form in the long run, this structure is associated with the suppression of short-run shocks by employer bargaining power in the period when real incomes decline. Empirically based comprehensive information about employment processes will enable policymakers to develop policies on the basis of empirically based comprehensive information. The effectiveness of these policies will represent the credibility of the knowledge economy.