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Duration dependence in the exit rate out of unemployment in Belgium. Is it true or spurious?

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Author Info
Muriel Dejemeppe (Fonds National de la Recherche Scientifique and Institut de Recherches Economiques et Sociales, Université catholique de Louvain, Belgium)
Bart Cockx (Département des Sciences Economiques and Institut de Recherches Economiques et Sociales, Université catholique de Louvain, Belgium)

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Abstract

On the basis of aggregate data for the early 1990s, we analyse the determinants of unemployment duration for laid-off male workers in Wallonia (Belgium). Our results indicate that if ranking in recruitment occurs, the standard mixed proportional hazard specification can be too restrictive, leading to an overstatement of the extent of true negative duration dependence. We conclude that negative duration dependence is largely spurious. We also decompose the time variation of the hazard in (unobserved) compositional and direct cyclical and seasonal effects. We find counter-cyclical variation in the quality of young workers, but none for the prime aged. Copyright © 2004 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jae.761
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File URL: http://qed.econ.queensu.ca:80/jae/2005-v20.1/
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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 20 (2005)
Issue (Month): 1 ()
Pages: 1-23
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Handle: RePEc:jae:japmet:v:20:y:2005:i:1:p:1-23

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Dynarski, Mark & Sheffrin, Steven M, 1990. "The Behavior of Unemployment Durations over the Cycle," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 350-56, May. [Downloadable!] (restricted)
  2. Jaap H. Abbring & Gerard J. van den Berg & Jan C. van Ours, 1997. "Business Cycles and Compositional Variation in U.S. Unemployment," Tinbergen Institute Discussion Papers 97-050/3, Tinbergen Institute. [Downloadable!]
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  3. Bart L. W. Cockx, 2000. "Analysis Of Transition Data By The Minimum-Chi-Square Method: An Application To Welfare Spells In Belgium," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 392-405, August. [Downloadable!] (restricted)
  4. Michael R. Darby & John C. Haltiwanger & Mark W. Plant, 1985. "Unemployment-Rate Dynamics and Persistent Unemployment Under Rational Expectations," NBER Working Papers 1558, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December. [Downloadable!] (restricted)
  6. Salant, Stephen W, 1977. "Search Theory and Duration Data: A Theory of Sorts," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 39-57, February. [Downloadable!] (restricted)
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  7. Muriel Dejemeppe, 2005. "A Complete Decomposition of Unemployment Dynamics using Longitudinal Grouped Duration Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(1), pages 47-70, 02. [Downloadable!] (restricted)
  8. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March. [Downloadable!] (restricted)
  9. Baker, Michael, 1992. "Unemployment Duration: Compositional Effects and Cyclical Variability," American Economic Review, American Economic Association, vol. 82(1), pages 313-21, March. [Downloadable!] (restricted)
  10. Abbring, Jaap H & van den Berg, Gerard J, 2007. "The Unobserved Heterogeneity Distribution in Duration Analysis," CEPR Discussion Papers 6219, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Muriel Dejemeppe & Yves Saks, 2002. "A New Light into Regional Unemployment Disparities in Belgium : Longitudinal Analysis of Grouped Duration Data," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  12. Breusch, T S & Pagan, A R, 1980. "The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics," Review of Economic Studies, Blackwell Publishing, vol. 47(1), pages 239-53, January. [Downloadable!] (restricted)
  13. Blanchard, Olivier Jean & Diamond, Peter A, 1994. "Ranking, Unemployment Duration, and Wages," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 417-34, July. [Downloadable!] (restricted)
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  14. Berg, Gerard J. van den & Lomwel, A. Gijsbert C. van & Ours, Jan C. van, 1998. "Unemployment dynamics and age," Serie Research Memoranda 0048, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics. [Downloadable!]
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  15. dÕAddio, Anna Cristina, 1998. "Unemployment Durations of French Young People," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1998021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  16. DÕADDIO, Anna Christina, 1998. "Unemployment durations of French young people," CORE Discussion Papers 1998051, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  17. Michael Baker & Angelo Melino, 1999. "Duration Dependence and Nonparametric Heterogeneity: A Monte Carlo Study," Working Papers melino-99-01, University of Toronto, Department of Economics. [Downloadable!]
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  18. Cockx, Bart & Ridder, Geert, 2001. "Social Employment of Welfare Recipients in Belgium: An Evaluation," Economic Journal, Royal Economic Society, vol. 111(470), pages 322-52, April. [Downloadable!] (restricted)
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  19. Christopher J. Flinn & James J. Heckman, 1982. "Models for the Analysis of Labor Force Dynamics," NBER Working Papers 0857, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  20. Michael Rosholm, 2001. "Cyclical variations in unemployment duration," Journal of Population Economics, Springer, vol. 14(1), pages 173-191. [Downloadable!] (restricted)
  21. Ridder, Geert, 1990. "The Non-parametric Identification of Generalized Accelerated Failure-Time Models," Review of Economic Studies, Blackwell Publishing, vol. 57(2), pages 167-81, April. [Downloadable!] (restricted)
  22. Godfrey, Leslie G, 1978. "Testing against General Autoregressive and Moving Average Error Models When the Regressors Include Lagged Dependent Variables," Econometrica, Econometric Society, vol. 46(6), pages 1293-1301, November. [Downloadable!] (restricted)
  23. Gerard J. van den Berg & Jan C. van Ours, 1999. "Duration dependence and heterogeneity in French youth unemployment durations," Journal of Population Economics, Springer, vol. 12(2), pages 273-285. [Downloadable!] (restricted)
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  24. Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-56, July. [Downloadable!] (restricted)
  25. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, vol. 47(5), pages 1249-66, September. [Downloadable!] (restricted)
  26. Kalwij, Adriaan S., 2001. "Individuals' Unemployment Durations over the Business Cycle," IZA Discussion Papers 369, Institute for the Study of Labor (IZA). [Downloadable!]
  27. Abbring, Jaap H. & van den Berg, Gerard J. & van Ours, Jan C., 2002. "The anatomy of unemployment dynamics," European Economic Review, Elsevier, vol. 46(10), pages 1785-1824, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ana Luísa Abras & Fabiana de Felício, 2005. "Duração E Taxa De Saída Do Desemprego: Evidências De Ausência De Dependência Na Duração Para As Regiões Metropolitanas Do Brasil (1984-2000)," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] 169, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  2. repec:ese:iserwp: is not listed on IDEAS
  3. Gabriele Cardullo & Bruno Van der Linden, 2006. "Employment Subsidies and Substitutable Skills: An Equilibrium Matching Approach," IZA Discussion Papers 2073, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Bruno, VAN DER LINDEN, 2005. "Equilibrium Evaluation of Active Labor Market Programmes Enhancing Matching Effectiveness," Discussion Papers (ECON - Département des Sciences Economiques) 2005007, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
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  5. Michal Franta, 2008. "Time Aggregation Bias in Discrete Time Models of Aggregate Duration Data," Working Papers 2008/10, Czech National Bank, Research Department. [Downloadable!]
  6. Cockx, Bart, 1999. "The Design of Active Labour Market Policies. What Matters and What Doesn't ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999035, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  7. Arntz, Melanie & Wilke, Ralf A., 2006. "Unemployment duration in Germany : individual and regional determinants of local job finding, migration and subsidized employment," ZEW Discussion Papers 06-92, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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