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Re-Employment Probabilities over the Business Cycle

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Author Info
Guido W. Imbens
Lisa M. Lynch

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Abstract

Using a Cox proportional hazard model that allows for a flexible time dependence that can incorporate both seasonal and business cycle effects, we analyze the determinants of re-employment probabilities of young workers from 1978-1989. We find considerable changes in the chances of young workers finding jobs over the business cycle, however, the characteristics of those starting jobless spells do not vary much over time. Therefore, government programs that target specific demographic groups may change individuals' positions within the queue of job seekers but will probably have a more limited impact on the overall re-employment probability. Living in an area with high local unemployment reduces re-employment chances as does being in a long spell of non-employment. However, when we allow for an interaction between the length of time of a jobless spell and the local unemployment rate we find the interaction term is positive. In other words, while workers appear to be scarred by a long spell of unemployment, the damage seems to be reduced if they are unemployed in an area with high overall unemployment.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4585.

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Date of creation: Dec 1993
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Handle: RePEc:nbr:nberwo:4585

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References listed on IDEAS
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. Blank, Rebecca M & Card, David E, 1991. "Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1157-89, November. [Downloadable!] (restricted)
    Other versions:
  3. Heckman, J & Singer, B, 1984. "The Identifiability of the Proportional Hazard Model," Review of Economic Studies, Blackwell Publishing, vol. 51(2), pages 231-41, April. [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. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April. [Downloadable!] (restricted)
  6. Honore, Bo E, 1990. "Simple Estimation of a Duration Model with Unobserved Heterogeneity," Econometrica, Econometric Society, vol. 58(2), pages 453-73, March. [Downloadable!] (restricted)
  7. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July. [Downloadable!] (restricted)
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  8. 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)
  9. van den Berg, Gerard J. & van der Klaauw, Bas, 2001. "Combining micro and macro unemployment duration data," Journal of Econometrics, Elsevier, vol. 102(2), pages 271-309, June. [Downloadable!] (restricted)
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  10. Lawrence F. Katz, 1986. "Layoffs, Recall and the Duration of Unemployment," NBER Working Papers 1825, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. van den Berg, Gerard J & van Ours, Jan C, 1996. "Unemployment Dynamics and Duration Dependence," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 100-125, January. [Downloadable!] (restricted)
  12. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 397-415, July. [Downloadable!] (restricted)
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  13. Lisa M. Lynch, 1989. "Private Sector Training and its Impact on the Earnings of Young Workers," NBER Working Papers 2872, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Robert Shimer, 2005. "The cyclicality of hires, separations, and job-to-job transitions," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 493-508. [Downloadable!]
  15. Narendranathan, W & Nickell, S & Stern, J, 1985. "Unemployment Benefits Revisited," Economic Journal, Royal Economic Society, vol. 95(378), pages 307-29, June. [Downloadable!] (restricted)
  16. Imbens, G W, 1994. "Transition Models in a Non-stationary Environment," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 703-20, November. [Downloadable!] (restricted)
  17. repec:fth:harver:1515 is not listed on IDEAS
  18. Lynch, Lisa M, 1989. "The Youth Labor Market in the Eighties: Determinants of Re-employment Probabilities for Young Men and Women," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 37-45, February. [Downloadable!] (restricted)
  19. Robert B. Barsky & Jeffrey A. Miron, 1989. "The Seasonal Cycle and the Business Cycle," NBER Working Papers 2688, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  20. Olivier Jean Blanchard & Peter Diamond, 1991. "The Cyclical Behavior of the Gross Flows of U.S. Workers," NBER Reprints 1582, National Bureau of Economic Research, Inc.
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  21. Lynch, Lisa M, 1991. "The Role of Off-the-Job vs. On-the-Job Training for the Mobility of Women Workers," American Economic Review, American Economic Association, vol. 81(2), pages 151-56, May. [Downloadable!] (restricted)
  22. 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)
  23. Elbers, Chris & Ridder, Geert, 1982. "True and Spurious Duration Dependence: The Identifiability of the Proportional Hazard Model," Review of Economic Studies, Blackwell Publishing, vol. 49(3), pages 403-09, July. [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. Muriel Dejemeppe & Yves Saks, 2002. "A New Light into Regional Unemployment Disparities in Belgium : Longitudinal Analysis of Grouped Duration Data," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2002019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  2. Yolanda K. Kodrzycki, 2007. "Using unexpected recalls to examine the long-term earnings effects of job displacement," Working Papers 07-2, Federal Reserve Bank of Boston. [Downloadable!]
  3. Olympia Bover & Ramón Gómez, 2004. "Another look at unemployment duration: exit to a permanent vs. a temporary job," Investigaciones Economicas, Fundación SEPI, vol. 28(2), pages 285-314, May. [Downloadable!]
  4. Knut Roed & Tao Zhang, 2003. "Does Unemployment Compensation Affect Unemployment Duration?," Economic Journal, Royal Economic Society, vol. 113(484), pages 190-206, January. [Downloadable!] (restricted)
  5. Stepan Jurajda & Frederick J. Tannery, 2001. "Unemployment Durations and Extended Unemployment Benefits in Local Labor Markets," Labor and Demography 0012006, EconWPA. [Downloadable!]
    Other versions:
  6. Olympia Bover & Manuel Arellano & Samuel Bentolila, 2002. "Unemployment Duration, Benefit Duration and the Business Cycle," Economic Journal, Royal Economic Society, vol. 112(479), pages 223-265, April. [Downloadable!] (restricted)
    Other versions:
  7. Kalwij, Adriaan S., 2001. "Individuals' Unemployment Durations over the Business Cycle," IZA Discussion Papers 369, Institute for the Study of Labor (IZA). [Downloadable!]
  8. Stepan Jurajda, 2001. "Unemployment Outflow and Unemployment Insurance Taxes," Labor and Demography 0012005, EconWPA. [Downloadable!]
    Other versions:
  9. Stepan Jurajda, 2001. "In ow into Unemployment: Employment Spells and Unemployment Insurance," Labor and Demography 0012008, EconWPA. [Downloadable!]
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