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The sources of metropolitan unemployment fluctuations in the Greater Taipei metropolitan area

Authors


  • I wish to express my thanks to three anonymous referees for valuable suggestions regarding econometric analysis and policy advice. I am also indebted to Shang-hsien Chiang, my father and my family both for adhering to and inspiring my innovative idea. At the same time, I would like thank Mat Huang for excellent data-processing assistance. Finally, the financial support is offered by national science council (NSC 99-2410-H-033-054).

Abstract

While past macroeconomic studies based on the natural rate hypothesis have tended to limit their discussions to cyclical unemployment, this paper applies shift-share analysis to additionally consider both frictional and structural unemployment, which is composed of sectoral shifts and geographic mismatches. The results of the estimation confirm that the recent high unemployment in the Taipei metropolitan area mainly stems from both sectoral shifts and frictional unemployment. Therefore, how to smooth the industrial transformation and more flexible turnovers should be critical in reducing the pressure brought about by such unemployment today.

Resumen

Mientras que los estudios macroeconómicos previos basados en la hipótesis de la tasa natural han tendido a limitar sus discusiones al desempleo cíclico, este artículo aplica un análisis shift-share para considerar adicionalmente tanto el desempleo friccional como el estructural, formado este por cambios sectoriales y desajustes geográficos. Los resultados de esta estimación confirman que el elevado desempleo sufrido recientemente en el área metropolitana de Taipei proviene principalmente tanto de cambios sectoriales como del desempleo friccional. Por ello, tanto la manera de suavizar la transformación industrial como una renovación del personal más flexible deberían ser críticos para reducir la presión provocada por el desempleo actual.

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