Cite JOURNAL ARTICLE
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 111 (1991), Iss. 4 : pp. 527–551
The paper offers a theoretical analysis of the different channels through which changes in aggregate demand bring about hysteresis or persistence in the labour market. The three mechanisms outlined in the theoretical model are (a) the insider-outsider effect, (b) the role of long-term unemployment and (c) the role of capital scrapping. The empirical results indicate that the labour market development in West Germany is characterized by persistence effects.