Purpose The paper aims to re‐examine the stationarity properties of unemployment rates in 12 European Union (EU) countries over the period 1988: I‐1999: IV. Design/methodology/approach This paper applies a battery of second‐generation panel unit root tests that allow for cross‐sectional correlation. Findings The study shows that, contrary to previous empirical literature, hysteresis does not characterise EU unemployment. Originality/value This paper uses recent advances in the econometrics of panel unit root tests. The new tests have more power than the traditional ones in detecting the null hypothesis of a unit root.
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Christopoulos et al. (2007) studied this question.
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