Asymmetry in the relationship between unemployment and the business cycle

This study analyses asymmetries in the dynamic relationship between unemployment and the business cycle in the UK and the US. Unemployment rates present clear unconditional asymmetry in both countries. Markov switching regime models with two regimes also display clear asymmetries and show that, in the US, the effect of cyclical contractions on unemployment is much stronger than that of expansions, while in the UK it is observed that male unemployment is much more sensitive to cyclical variations than female unemployment. Copyright Springer-Verlag Berlin Heidelberg 2015