Hello Armei,
Thanks for your question.
According to Webster’s, hysteresis is defined as:
Hysteresis \Hys`te*re"sis\, n. [NL., fr. Gr. ? to be behind, to
lag.] (Physics)
A lagging or retardation of the effect, when the forces
acting upon a body are changed, as if from velocity or
internal friction; a temporary resistance to change from a
condition previously induced, observed in magnetism,
thermoelectricity, etc., on reversal of polarity.
(www.dict.org)
After doing some research, it appears that this term is a part of
economic theory, much of which is above my current understanding. It
seems however that hysteresis effects are temporary shocks to a labor
market which can have a lasting, long-term impact upon it. It seems
that most instances of this can be divided into a few categories.
A. A sudden, unforeseen variable, such as a temporary rise in
unemployment
B. Interaction with a foreign variable, such as the interactions
between foreign markets.
C. Divergent behavior of a known variable, such as labor market
insiders doing something unforeseen
Most of the research I have found appears to relate to the hysteresis
effects of unemployment. The theory of hysteresis seems to try to
establish that to properly analyze a particular model, one needs to be
aware of the complete history of the variables in that model to really
be able predict the long term actions of it. As an analogy, imagine 6
spheres, all evenly spaced from each other, rotating in a perfect,
endless circle. Suddenly, a tiny sphere comes out of nowhere and hits
one of the spheres, knocking it slightly out of place. The sphere
that was struck is still moving in that circle, but its course and
speed has changed just a tiny bit. This change may not be directly
noticeable without very specific measurement, and you would not know
to measure if you never thought that tiny spheres could affect the
larger ones in such a way. That really seems to be the gist of it. I
think the hysteresis theory was pushed forward because of the weakness
of current economic theory in predicting things, like unemployment.
Hysteresis theory attempts to explain how a fast moving system can
effect a slower one over time.
The origin of the word hysteresis is as follows:
"The word hysteresis is of the Greek origin and means etymologically
`coming behind'. It was introduced into the scientific vocabulary
about 120 years ago by the Scottish physicist, Alfred Ewing, as
follows. ``When there are two quantities M and N, such that cyclic
variations of N cause cyclic variation of M, then if the changes of M
lag behind those of N, we may say that there is hysteresis in the
relation of M and N."
(http://www.physics.ucc.ie/~oll/hysteresis/node3.htm)
The earliest reference I can find to hysteresis effects in labor
markets is by a Professor Friedman, whom advanced his ideas about it
in 1968. Unfortunately, I was only able to find an obscure reference
to this which did not even mention the title of the paper. The word
hysteresis is used in a variety of fields, from Teflon manufacturing
to quantum physics. Here are some research studies I have found about
Hysteresis effects. As you can see from the titles, this is not
exactly light reading:
Hysteresis in an Evolutionary Labor Market
http://econwpa.wustl.edu:8089/eps/comp/papers/0004/0004003.pdf
Qualitative Aspects and Economic Applications of Hysteresis Modeling
http://216.239.33.100/search?q=cache:M24729Nqix8C:www.zib.de/amcw01/tex/minis/MS016.ps+hysteresis+effects+%22labor+market%22&hl=en&ie=UTF-8
History Dependence and Hysteresis Effects in an Investment Model with
Adjustment Costs
http://www.wiwi.uni-bielefeld.de/~semmler/cem/wp/no_32.pdf
Monetary Policy, Multiple Equilibria, and Hysteresis Effect on the
Labor Market
http://www.wiwi.uni-bielefeld.de/~semmler/cem/wp/no_15.pdf
Unemployment Persistence: The Hysteresis Assumption Revisited
http://eurequa.univ-paris1.fr/membres/karame/Hysteresis2.PDF
Some scientific information about hysteresis if you're interested:
Hysteresis Modeling
http://www.ece.drexel.edu/faculty/friedman/MMGroup/WebPages/Hysteresis%20Modeling.htm
What's Hysteresis?
http://www.lassp.cornell.edu/sethna/hysteresis/WhatIsHysteresis.html
It seems that the main conclusion of these reports is that Hysteresis
effects do exist, and it should be a known factor in economic models.
That more research needs to be done is also a definite conclusion. It
seems like a vastly complicated subject that is really still in its
infancy, as far as the economic side of it goes. I hope this helps.
Best Regards,
watershed-ga |
