IDEAS home Printed from https://ideas.repec.org/a/fip/fedlrv/00064.html
   My bibliography  Save this article

Duration Dependence and Composition in Unemployment Spells

Author

Listed:
  • James D. Eubanks
  • David Wiczer

Abstract

This article reviews the evidence for duration dependence in job-finding rates and its implications for the unemployment duration distribution. The authors document duration dependence and show that it exists within nearly every demographic subgroup. Then, they examine the implications of duration dependence on unemployment duration, emphasizing that a uniform job-finding rate that does not incorporate duration dependence understates unemployment duration. Finally, they explore a composition-based approach to duration dependence, where they solve for the distribution of preexisting heterogeneity that is consistent with observed duration dependence. The authors look at how this distribution varies cyclically and, in particular, during the Great Recession. The largest changes occur at the low finding-rate tail of this distribution.

Suggested Citation

  • James D. Eubanks & David Wiczer, 2016. "Duration Dependence and Composition in Unemployment Spells," Review, Federal Reserve Bank of St. Louis, vol. 98(4), pages 263-276.
  • Handle: RePEc:fip:fedlrv:00064
    DOI: 10.20955/r.2016.263-276
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.20955/r.2016.263-276
    File Function: http://dx.doi.org/10.20955/r.2016.263-276
    Download Restriction: no

    File URL: https://files.stlouisfed.org/files/htdocs/publications/review/2016-12-05//duration-dependence-and-composition-in-unemployment-spells.pdf
    File Function: Full text
    Download Restriction: no

    File URL: https://libkey.io/10.20955/r.2016.263-276?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. David Wiczer, 2013. "Long-term Unemployment: Attached and Mismatched?," 2013 Meeting Papers 1101, Society for Economic Dynamics.
    2. Robert Shimer, 2012. "Reassessing the Ins and Outs of Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 127-148, April.
    3. Gary Solon & Ryan Michaels & Michael W. L. Elsby, 2009. "The Ins and Outs of Cyclical Unemployment," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 84-110, January.
    4. Heckman, James J, 1991. "Identifying the Hand of the Past: Distinguishing State Dependence from Heterogeneity," American Economic Review, American Economic Association, vol. 81(2), pages 75-79, May.
    5. Heckman, James J. & Singer, Burton, 1984. "Econometric duration analysis," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 63-132.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arne F. Lyshol & Plamen T. Nenov & Thea Wevelstad, 2021. "Duration Dependence and Labor Market Experience," LABOUR, CEIS, vol. 35(1), pages 105-134, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carlos Carrillo‐Tudela & Ludo Visschers, 2023. "Unemployment and Endogenous Reallocation Over the Business Cycle," Econometrica, Econometric Society, vol. 91(3), pages 1119-1153, May.
    2. Benedikt Herz & Thijs van Rens, 2020. "Accounting for Mismatch Unemployment," Journal of the European Economic Association, European Economic Association, vol. 18(4), pages 1619-1654.
    3. Hie Ahn & James Hamilton, 2016. "Heterogeneity and Unemployment Dynamics," Working Papers id:11130, eSocialSciences.
    4. David Wiczer, 2013. "Long-term Unemployment: Attached and Mismatched?," 2013 Meeting Papers 1101, Society for Economic Dynamics.
    5. Hie Joo Ahn, 2016. "The Role of Observed and Unobserved Heterogeneity in the Duration of Unemployment Spells," Finance and Economics Discussion Series 2016-063r1, Board of Governors of the Federal Reserve System (U.S.), revised 25 Mar 2022.
    6. Andreas Hornstein, 2012. "Accounting for unemployment: the long and short of it," Working Paper 12-07, Federal Reserve Bank of Richmond.
    7. Elsby, Michael W.L. & Hobijn, Bart & Şahin, Ayşegül, 2015. "On the importance of the participation margin for labor market fluctuations," Journal of Monetary Economics, Elsevier, vol. 72(C), pages 64-82.
    8. Michael W. L. Elsby & Jennifer C. Smith & Jonathan Wadsworth, 2021. "Population growth, immigration and labour market dynamics," CEP Discussion Papers dp1814, Centre for Economic Performance, LSE.
    9. Shigeru Fujita, 2011. "Dynamics of worker flows and vacancies: evidence from the sign restriction approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(1), pages 89-121, January/F.
    10. Borowczyk-Martins, Daniel & Lalé, Etienne, 2020. "The ins and outs of involuntary part-time employment," Labour Economics, Elsevier, vol. 67(C).
    11. Robert Dixon & G. C. Lim & Jan C. van Ours, 2015. "The effect of shocks to labour market flows on unemployment and participation rates," Applied Economics, Taylor & Francis Journals, vol. 47(24), pages 2523-2539, May.
    12. Kurozumi, Takushi & Van Zandweghe, Willem, 2010. "Labor market search, the Taylor principle, and indeterminacy," Journal of Monetary Economics, Elsevier, vol. 57(7), pages 851-858, October.
    13. Sengul, Gonul & Tasci, Murat, 2020. "Unemployment flows, participation, and the natural rate of unemployment: Evidence from turkey," Journal of Macroeconomics, Elsevier, vol. 64(C).
    14. Portugal, Pedro & Rua, António, 2018. "Zooming the Ins and Outs of the U.S. Unemployment with a Wavelet Lens," IZA Discussion Papers 11559, Institute of Labor Economics (IZA).
    15. Ronald Bachmann & Peggy Bechara, 2019. "The Importance of Two‐Sided Heterogeneity for the Cyclicality of Labour Market Dynamics," Manchester School, University of Manchester, vol. 87(6), pages 794-820, December.
    16. Murtin, Fabrice & de Serres, Alain & Hijzen, Alexander, 2014. "Unemployment and the coverage extension of collective wage agreements," European Economic Review, Elsevier, vol. 71(C), pages 52-66.
    17. Krause, Michael U. & Lopez-Salido, David J. & Lubik, Thomas A., 2008. "Do search frictions matter for inflation dynamics?," European Economic Review, Elsevier, vol. 52(8), pages 1464-1479, November.
    18. Michael W. L. Elsby & Bart Hobijn & Aysegul Sahin, 2010. "The Labor Market in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(1 (Spring), pages 1-69.
    19. Shigeru Fujita & Makoto Nakajima, 2016. "Worker Flows and Job Flows: A Quantitative Investigation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 22, pages 1-20, October.
    20. Adjemian, Stéphane & Karamé, Frédéric & Langot, François, 2021. "Nonlinearities and Workers’ Heterogeneity in Unemployment Dynamics," Dynare Working Papers 71, CEPREMAP.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedlrv:00064. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Scott St. Louis (email available below). General contact details of provider: https://edirc.repec.org/data/frbslus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.