The Impact of Demographic and Individual Heterogeneity on Unemployment Duration: A Regional Study
AbstractSince 1992, claimant unemployment has fallen by almost 1½ million and on the ILO definition by nearly 1 million. Despite this fall, changes to the headline rate of unemployment masks a far more complex pattern of the UK?s unemployment experience. For many individuals unemployment is a short-lived affair. For others, the risk of repeated or prolonged periods of unemployment is high. Repeated or prolonged unemployment spells may reflect occupational choice or poor employability brought about by poor skills and/or repeated labour market exclusion. They may also reflect a lack of employment opportunities concentrated in specific geographical areas. Both facets amount to a significant detachment from work. They also contribute to recent growth in the level of non-working households and low pay. The differential risk of unemployment across UK regions and population sub-groups is well recognised. However, the extent to which residential location and individual heterogeneity contribute to the duration of unemployment is more difficult to discern. This paper investigates the impact of individual heterogeneity and regional influences on unemployment duration utilising cross-section microeconomic data drawn from a representative random survey of individual job seekers for the English County of Kent. These individual-level data are unique in that they provide information concerning the personal characteristics of job seekers, alongside direct observations of both their reservation wages and job search behaviour. The availability of such data is rare. To our knowledge, there is no existing study utilising such data at the regional level. This paper contributes to the empirical literature by analysing the extent to which individual heterogeneity and intra-regional variation in labour market opportunities impact upon the observed distribution of unemployment duration(s). In particular, the paper analyses the extent to which the duration of unemployment is determined by individual choice. This is an important issue for the formation and evaluation of policy. If individual choice is found to significantly influence the duration of unemployment then the efficacy of current microeconomic supply?side initiatives such as ?The New Deal? and other welfare to work policies is supported. The existence of regional influences, by contrast, advocates a more active role for macroeconomic demand-led management. It also supports a more integrated strategy for the implementation of urban and regional policy such as the recent creation of Frameworks for Regional Employment and Skills Action (FRESAs). Utilising an econometric model tied closely to job search theory, our results reveal that individual characteristics and related ?choice? variables? such as educational attainment, labour market mobility and job search behaviour exercise important impacts on the duration of unemployment. However, after controlling for such factors, there remain significant geographical variations. These results are robust for both males and females. Thus, the results provide new insights into the benefits of current policies aimed at increasing the employability of the unemployed.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by European Regional Science Association in its series ERSA conference papers with number ersa03p496.
Date of creation: Aug 2003
Date of revision:
Contact details of provider:
Postal: Welthandelsplatz 1, 1020 Vienna, Austria
Web page: http://www.ersa.org
Other versions of this item:
- William Collier, 2003. "The Impact of Demographic and Individual Heterogeneity on Unemployment Duration: A Regional Study," Studies in Economics 0302, Department of Economics, University of Kent.
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
This paper has been announced in the following NEP Reports:
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.:
- Atkinson, A. B. & Gomulka, J. & Micklewright, J. & Rau, N., 1984. "Unemployment benefit, duration and incentives in Britain : How robust is the evidence?," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 3-26.
- Jo Blanden & Alissa Goodman & Paul Gregg & Stephen Machin, 2002.
"Changes in intergenerational mobility in Britain,"
LSE Research Online Documents on Economics
19507, London School of Economics and Political Science, LSE Library.
- Jo Blanden & Alissa Goodman & Paul Gregg & Stephen Machin, 2002. "Changes in Intergenerational Mobility in Britain," CEP Discussion Papers dp0517, Centre for Economic Performance, LSE.
- Blanden, Jo & Alissa Goodman & Paul Gregg & Stephen Machin, 2002. "Changes in Intergenerational Mobility in Britain," Royal Economic Society Annual Conference 2002 31, Royal Economic Society.
- Jo Blanden & Alissa Goodman & Paul Gregg & Stephen Machin, 2002. "Changes in Intergenerational Mobility in Britain," CEE Discussion Papers 0026, Centre for the Economics of Education, LSE.
- Lancaster, Tony, 1985. "Simultaneous equations models in applied search theory," Journal of Econometrics, Elsevier, vol. 28(1), pages 113-126, April.
- Arulampalam, Wiji & Stewart, Mark B, 1995. "The Determinants of Individual Unemployment Durations in an Era of High Unemployment," Economic Journal, Royal Economic Society, vol. 105(429), pages 321-32, March.
- Blackaby, D H & Manning, D N, 1990. "The North-South Divide: Questions of Existence and Stability?," Economic Journal, Royal Economic Society, vol. 100(401), pages 510-27, June.
- Dolton, Peter & O'Neill, Donal, 1996. "Unemployment Duration and the Restart Effect: Some Experimental Evidence," Economic Journal, Royal Economic Society, vol. 106(435), pages 387-400, March.
- Sarah Brown & John Sessions, 1997. "A Profile of UK Unemployment: Regional versus Demographic Influences," Regional Studies, Taylor & Francis Journals, vol. 31(4), pages 351-366.
- Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005.
"Unemployment: Macroeconomic Performance and the Labour Market,"
Oxford University Press, number 9780199279173, September.
- Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345, September.
- Jackman, R & Layard, Richard & Pissarides, C, 1989. "On Vacancies," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(4), pages 377-94, November.
- Gorter, Dirk & Gorter, Cees, 1993. "The Relation between Unemployment Benefits, the Reservation Wage and Search Duration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(2), pages 199-214, May.
- Han, Aaron & Hausman, Jerry A, 1990. "Flexible Parametric Estimation of Duration and Competing Risk Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(1), pages 1-28, January-M.
- Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
- Harry J. Holzer, 1986.
"Search Method Use by Unemployed Youth,"
NBER Working Papers
1859, National Bureau of Economic Research, Inc.
- Disney, Richard & Webb, Steven, 1991. "Why Are There So Many Long Term Sick in Britain?," Economic Journal, Royal Economic Society, vol. 101(405), pages 252-62, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier).
If references are entirely missing, you can add them using this form.