Thresholds for Employment and Unemployment - a Spatial Analysis of German Regional Labour Markets 1992-2000

19

Again, the average does not reflect the variations during the sample period (Figure 6.3).
In half of the years of the sample period the Okun relation is practically suspended.
However, the spatial SUR estimate of the implied unemployment threshold of 2.2% for
the entire sample period proves to be highly significant. It is broadly in line the finding
of Schalk and Untiedt (2000) who established a decline of the unemployment threshold
by 2 percentage since the 70s. On the contrary, Walwei’s (2002) estimate lies close to
the non-spatial GLS threshold of 4.0% that seems to be overrated as spatial effects are
not controlled for.

Figure 6.3: Okun’s law: scatterplots with regression lines

DALQ93 vs. WBIP93                            DALQ94 vs. WBIP94                            DALQ95 vs. WBIP95

0.06

0.04.

0.02-

0.00-

0.1

0.2

-0.02

-0.1

0.00-

-0.04-

-0.02-

0.00     0.05     0.10

0.02

0.00-

-0.02-

-0.04-

-0.2      -0.1       0.0       0.1       0.2

0.0

WBIP96                                    WBIP97                                    WBIP98

WBIP99                                    WBIP00

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