Download or read book Endogeneity in Structural Unemployment Equations written by International Monetary Fund and published by International Monetary Fund. This book was released on 1993-12-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the endogeneity of several structural variables which enter unemployment rate equations—the generosity of unemployment benefits, nonwage labor costs, the relative minimum wage, and the degree of unionization. It finds evidence of reverse causality for these structural variables based on causality tests. The structural unemployment rate equation is then estimated using instruments suggested by the empirical analysis of the structural variables. The paper confirms the earlier finding that the generosity of unemployment benefits, nonwage labor costs, and the relative minimum wage have a significant positive impact on the unemployment rate, but fails to find an effect for the degree of unionization.