LONG-TERM UNEMPLOYMENT, HYSTERESIS AND THE UNEMPLOYMENT VACANCY RELATIONSHIP - A REGIONAL-ANALYSIS

In this paper we investigate the unemployment-vacancy (UV) relationship in the ten standard regions of Great Britain. In particular, we test the hypothesis of hysteresis in the unemployment rate and consider the importance of long term unemployment in the hysteresis mechanism. Previous work has demonstrated the importance of long term unemployment in empirical models of the aggregate UV relationship. In the regions of Britain, there is considerable heterogeneity both in the measured UV relationship and in the relative importance of long term unemployment. The nature of this heterogeneity is considered in this paper.