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Long-term unemployment and the Great Recession: Evidence from UK stocks and flows

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Abstract

Long-term unemployment more than doubled during the UK's Great Recession. Only a small fraction of this persistent increase can be explained by the changing composition of the unemployment pool. Aggregate exit rates from unemployment exhibit negative duration dependence. A stocks-flows decomposition, which allows for this fact in a limited way, indicates the importance of participation flows, especially from unemployment to inactivity, in accounting for long-term unemployment’s recessionary rise. How changes in transition rates contributed to this rise suggests a general shift in the labour force attachment of the long-term unemployed, which cannot be accounted for by observable characteristics.

Suggested Citation

  • Carl Singleton, 2016. "Long-term unemployment and the Great Recession: Evidence from UK stocks and flows," Edinburgh School of Economics Discussion Paper Series 273, Edinburgh School of Economics, University of Edinburgh.
    • Handle: RePEc:edn:esedps:273
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    More about this item

    Keywords

    Long-term unemployment; Worker flows; Labour force participation; Great Recession;
    All these keywords.

    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
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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