o Time : May 26, Friday 12:00 ~ 2:00 p.m.

o Venue : 9705(The 7th floor seminar room)


Sectoral Shifts Hypothesis and Natural Rate of Unemployment


-Abstract

Since Lilien(1982) proposed the cross-sectional dispersion of sectoral shocks as a measure of sectoral shifts, it has been the most common measure used in the literature. This paper presents numerical examples that clearly illustrate the importance of skewness when sectoral shocks have and asymmetric distribution. We introduce the empirical measure of skewness into the unemployment rate equation and test the sectoral shifts hypothesis in the Lilien type models which generally support the hypothesis and in the Abraham and Katx(1984) type models which generally reject the hypothesis. Our empirical results show a strong support for the hypothesis in both models, and identify the source of the lack of support in the past studies of Abraham-Katz model.

Key Words: Sectoral Shifts, Sectoral Shocks, Natural Rate of Unemployment, Dispersion, Skewness
JEL Classification: E24, E32, J69