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Separability of Duration Dependence and Unobserved Heterogeneity

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  • Turon, Hélène

    ()
    (University of Bristol)

Abstract

Mixed proportional hazard models are commonly used to estimate duration dependence and unobserved heterogeneity in unemployment exit rates. Some strong assumptions are made in this framework, i.e. that the various influences on the individual unemployment exit rate are separable. The model we use in this paper allows for both the individual duration dependence pattern and the inflow composition to exhibit cyclical variations, thereby relaxing two of the three separability assumptions. The aim of this paper is to assess the validity of the third separability assumption, namely that the duration dependence pattern is the same for all individuals.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 754.

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Length: 36 pages
Date of creation: Apr 2003
Date of revision:
Handle: RePEc:iza:izadps:dp754

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Keywords: unemployment outflow rate; regional and age group data; mixed proportional hazard;

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  1. Lockwood, Ben, 1991. "Information Externalities in the Labour Market and the Duration of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 58(4), pages 733-53, July.
  2. Abbring, Jaap H. & Berg, Gerard J. van den & Ours, Jan C. van, 1997. "Business cycles and compositional variation in U.S. unemployment," Serie Research Memoranda 0020, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  3. 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.
  4. Stephen Machin & Alan Manning, 1998. "The Causes and Consequences of Long-Term Unemployment in Europe," CEP Discussion Papers dp0400, Centre for Economic Performance, LSE.
  5. Blanchard, O.J. & Diamond, P., 1990. "Ranking, Unemployment Duration, And Wages," Working papers 546, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Abbring, J.H. & Berg, G. van den & Ours, J.C. van, 1999. "The Anatomy of Unemployment Dynamics," Discussion Paper 1999-81, Tilburg University, Center for Economic Research.
  7. Jackman, Richard & Layard, Richard, 1991. "Does Long-term Unemployment Reduce a Person's Chance of a Job? A Time-Series Test," Economica, London School of Economics and Political Science, vol. 58(229), pages 93-106, February.
  8. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July.
  9. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 24-50, January.
  10. Kalwij, Adriaan, 2001. "Individuals' Unemployment Durations over the Business Cycle," IZA Discussion Papers 369, Institute for the Study of Labor (IZA).
  11. Berg, G.J. & Ours, J.C., 1993. "Unemployment dynamics and duration dependence," Serie Research Memoranda 0022, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  12. Berg, G. van den & Ours, J.C. van, 1996. "Unemployment dynamics and duration dependence," Open Access publications from Tilburg University urn:nbn:nl:ui:12-86874, Tilburg University.
  13. Baker, Michael, 1992. "Unemployment Duration: Compositional Effects and Cyclical Variability," American Economic Review, American Economic Association, vol. 82(1), pages 313-21, March.
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Cited by:
  1. Xavier Joutard & Luis A.I. Sagaon Teyssier, 2006. "Unemployment and employment dynamics in the Mexican segmented labour market," Working Papers halshs-00410460, HAL.

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