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Recurrent unemployment, welfare benefits and heterogeneity

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Author Info

  • JOSE Ma ARRANZ
  • Juan Muro

Abstract

The objective of this paper is to investigate the causes of the recurrences of individuals in unemployment during benefit periods. So as to attain this objective, we use administrative data from the Spanish Employment Agency to estimate a duration model with multiple spells that allows for unemployment state dependence through lagged unemployment duration in order to distinguish the heterogeneity and scarring effects. We find that an increase in the duration of previous unemployment benefit periods lengthens the expected duration of future unemployment benefit periods. True state dependence and heterogeneity, intensity of job search and local labour market conditions are among the elements that explain this unemployment state dependence.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/0269217042000266436
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 18 (2004)
Issue (Month): 4 ()
Pages: 423-441

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Handle: RePEc:taf:irapec:v:18:y:2004:i:4:p:423-441

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Related research

Keywords: State dependence; unemployment benefits; mixed proportional hazard model; unobserved heterogeneity;

References

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  1. Stephen P. Jenkins & Carlos GarcÌa-Serrano, 2004. "The Relationship between Unemployment Benefits and Re-employment Probabilities: Evidence from Spain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(2), pages 239-260, 05.
  2. Heckman, James J. & Singer, Burton, 1984. "Econometric duration analysis," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 63-132.
  3. Juan J Dolado & Carlos Garcia--Serrano & Juan F. Jimeno, 2002. "Drawing Lessons From The Boom Of Temporary Jobs In Spain," Economic Journal, Royal Economic Society, vol. 112(721), pages F270-F295, June.
  4. José María Arranz & Carlos García-Serrano, . "Non-Employment And Subsequent Wage Losses," Working Papers 19-03 Classification-JEL , Instituto de Estudios Fiscales.
  5. Narendranathan, W. & Stewart, M.B., 1989. "Modelling The Probability Of Leaving Unemployment: Competing Risks Models With Flexible Baseline Hazards," The Warwick Economics Research Paper Series (TWERPS) 331, University of Warwick, Department of Economics.
  6. Muhleisen, Martin & Zimmermann, Klaus F., 1994. "A panel analysis of job changes and unemployment," European Economic Review, Elsevier, vol. 38(3-4), pages 793-801, April.
  7. José María Arranz & Carlos García- Serrano, 2004. "The influence of previous labour market experiences on subsequent job tenure," Hacienda Pública Española, IEF, vol. 168(1), pages 47-68, march.
  8. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
  9. Blanchard, O.J. & Diamond, P., 1990. "Ranking, Unemployment Duration, And Wages," Working papers 546, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Stephen Machin & Alan Manning, 1998. "The causes and consequences of long-term unemployment in Europe," LSE Research Online Documents on Economics 20255, London School of Economics and Political Science, LSE Library.
  11. 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.
  12. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 24-50, January.
  13. Narendranathan, W & Nickell, S & Stern, J, 1985. "Unemployment Benefits Revisited," Economic Journal, Royal Economic Society, vol. 95(378), pages 307-29, June.
  14. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-88, January.
  15. Boheim, Rene & Taylor, Mark P., 2002. "The search for success: do the unemployed find stable employment?," Labour Economics, Elsevier, vol. 9(6), pages 717-735, December.
  16. Flaig, Gebhard & Licht, Georg & Steiner, Viktor, 1993. "Testing for state dependence effects in a dynamic model of male unemployment behaviour," ZEW Discussion Papers 93-07, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  17. Heckman, James J & Borjas, George J, 1980. "Does Unemployment Cause Future Unemployment? Definitions, Questions and Answers from a Continuous Time Model of Heterogeneity and State Dependence," Economica, London School of Economics and Political Science, vol. 47(187), pages 247-83, August.
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Citations

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Cited by:
  1. Alba-Ramirez, Alfonso & Arranz, Jose M. & Munoz-Bullon, Fernando, 2007. "Exits from unemployment: Recall or new job," Labour Economics, Elsevier, vol. 14(5), pages 788-810, October.
  2. de Koning, Jaap & Kroes, Hassel & van der Steen, Alex, 2006. "Patterns of work and use of benefits over the life course: estimates and simulations based on Dutch microdata," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2006-112, Social Science Research Center Berlin (WZB).
  3. José Arranz & Olga Cantó, 2012. "Measuring the effect of spell recurrence on poverty dynamics—evidence from Spain," Journal of Economic Inequality, Springer, vol. 10(2), pages 191-217, June.
  4. Nagore García, Amparo & van Soest, Arthur, 2014. "Unemployment Transitions to Stable and Unstable Jobs Before and During the Crisis," IZA Discussion Papers 8121, Institute for the Study of Labor (IZA).
  5. Blázquez, Maite & Herrarte, Ainhoa & Sáez, Felipe, 2012. "Occupational matching: The case of job seekers inscribed at Public Employment Offices," Working Papers in Economic Theory 2012/02, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).

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