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A New Light into Regional Unemployment Disparities in Belgium : Longitudinal Analysis of Grouped Duration Data

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Author Info

  • Muriel Dejemeppe

    (FNRS - Belgium and IRES, UCL - Belgium)

  • Yves Saks

Abstract

In this paper, we invesitgate whether the diverging evolution of unemployment in the two main regions of Belgium, Flanders and Wallonia, is driven by different evolutions in their average unemployment duration and/or their unemployment incidence. To that purpose, we proceed in two stages. In the first stage, we estimate a mixed proportional hazard model by region, and decompose variations in the aggregate outflow rate over calendar time between a general effect, i.e. changes in the exit rate of all currently unemployed, and a composition effect, i.e. fluctuations in the average quality of entrants. We also specify a non-proportional model to check whether the general effects is the same for unemployed workers with different schooling levels and sub-region of living, in each region. In the second stage, we decompose variations of the unemployment stock in Flanders and Wallonia into an incidence effect and the duration effect estimated in the first stage. We base our analysis on yearly exit probabilities of male workers aged 25-44 and flowing into unemployment in June, each year from 1972 to 1992. The use of aggregate data covering 21 years and stratified by a set of relevant characteristics allow us to control for changes in the inflow composition without relying (completely) on functional form assumptions.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2002019.

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Length: 60
Date of creation: 01 Jun 2002
Date of revision:
Handle: RePEc:ctl:louvir:2002019

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Keywords: Unemployment duration; unemployment incidence; business cycle; composition effect;

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References

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  1. Abbring, Jaap H & van den Berg, Gerard J & van Ours, Jan C, 1995. "The Anatomy of Unemployment Dynamics," CEPR Discussion Papers 1202, C.E.P.R. Discussion Papers.
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  3. 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.
  4. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "Job reallocation, employment fluctuations and unemployment," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 18, pages 1171-1228 Elsevier.
  5. Cockx, Bart & Dejemeppe, Muriel, 2000. "Duration and Calendar Time Dependence of the Exit Rate out of Unemployment in Belgium. Is it True or Spurious?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  6. 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.
  7. Guido Imbens & Lisa Lynch, 2006. "Re-employment probabilities over the business cycle," Portuguese Economic Journal, Springer, vol. 5(2), pages 111-134, August.
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  11. 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.
  12. Michael Rosholm, 2001. "Cyclical variations in unemployment duration," Journal of Population Economics, Springer, vol. 14(1), pages 173-191.
  13. Baker, Michael, 1992. "Unemployment Duration: Compositional Effects and Cyclical Variability," American Economic Review, American Economic Association, vol. 82(1), pages 313-21, March.
  14. Candelon, Bertrand & Hecq, Alain & Lohest, Olivier, 2000. "Labor Mobility in Belgium : An Empirical Analysis of the Relationship between Provincial Employment Dynamics and Migration," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000029, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  15. 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.
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  17. Kalwij, Adriaan, 2001. "Individuals' Unemployment Durations over the Business Cycle," IZA Discussion Papers 369, Institute for the Study of Labor (IZA).
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Cited by:
  1. Muriel Dejemeppe & Bart Cockx, 2005. "Duration dependence in the exit rate out of unemployment in Belgium. Is it true or spurious?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 1-23.
  2. Bruno Van Der Linden, 2003. "Unemployment Insurance and Training in an Equilibrium Matching Model with Heterogeneous Agents," Working Papers 2003-01, Centre de Recherche en Economie et Statistique.

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