Population-Employment Models: Stationarity, Cointegration, and Dynamic Adjustment
Gary L. Hunt
Population and employment in the 50 United States are found to be non-stationary and cointegrated. Vector error correction (VEC) models exhibit dynamics with adjustment to shocks essentially completed in "30-35 years". This contrasts with adjustment periods between "one and two centuries" for non-stationary models specified in levels. These dynamic adjustment patterns support the hypothesis that relatively long adjustment periods and slow dynamics are probably the spurious results of using non-stationary levels of population and employment outside of a VEC model framework. Recommendations for modeling the population-employment relationship are offered based on the findings reported. Copyright Blackwell Publishers, 2006
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