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U.S. Unemployment Duration: Has Long Become Longer or Short Become Shorter?

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  • José Ferreira Machado
  • Pedro Portugal
  • Juliana Guimarães

Abstract

The U.S. labor market has been experiencing unprecedented high average unemployment duration. The shift in the unemployment duration distribution can be traced back to the early nineties. In this study, censored quantile regression methods are employed to analyze the changes in the US unemployment duration distribution. We explore the decomposition method proposed by Machado and Mata (2005) to disentangle the contribution of the changes generated by the covariate distribution and by the conditional distribution. The data used in this inquiry are taken from the nationally representative Displaced Worker Surveys of 1988 and 1998. We provide evidence that the change in the unemployment duration distribution is mainly produced by the opposing effects of a sharp rise in job-to-job transition rates and an increased sensitivity of unemployment duration to unemployment rates. Compositional changes in the labor force played a limited role. We rationalize our findings by arguing that improved screening technology is likely to be the relevant underlying mechanism at work.

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Bibliographic Info

Paper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w200613.

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Date of creation: 2006
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Handle: RePEc:ptu:wpaper:w200613

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Citations

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Cited by:
  1. Rubiana Chamarbagwala, 2010. "Economic liberalization and urban–rural inequality in India: a quantile regression analysis," Empirical Economics, Springer, Springer, vol. 39(2), pages 371-394, October.
  2. Toshihiko Mukoyama & Aysegül Sahin, 2004. "Why did the average duration of unemployment become so much longer?," Staff Reports 194, Federal Reserve Bank of New York.
  3. Bachmann, Ronald & Sinning, Mathias, 2012. "Decomposing the Ins and Outs of Cyclical Unemployment," IZA Discussion Papers 6362, Institute for the Study of Labor (IZA).
  4. Fitzenberger, Bernd & Wilke, Ralf A., 2007. "New insights on unemployment duration and post unemployment earnings in Germany: censored Box-Cox quantile regression at work," ZEW Discussion Papers 07-007, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Philip Ball & Ralf Wilke, . "Job seeker's allowance in Great Britain: How does the regional labour market affect the duration until job finding?," Discussion Papers 09/03, University of Nottingham, School of Economics.
  6. Josep Pijoan-Mas & Hernan Ruffo & Claudio Michelacci, 2012. "Inequality in Unemployment Risk and in Wages," 2012 Meeting Papers, Society for Economic Dynamics 794, Society for Economic Dynamics.

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