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State Dependence in Unemployment

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  • Nisar Ahmad

    (Department of Border Region Studies, University of Southern Denmark, Sønderborg, Alsion 2, 6400, Denmark)

Abstract

This study examines the extent state dependence among unemployed immigrants in a dynamic discrete choice framework. Three alternative methodologies are employed to control for the problem of the initial condition. The empirical findings show that there is a considerable correlation between the unobserved individual heterogeneity and the initial condition and that the degree of state dependence is overstated if we do not address this problem. The results show that an individual who was unemployed at period “t-1” has 6.5 percentage points higher probability of being unemployed again at period t compared to an individual who was employed at period “t-1”.

Suggested Citation

  • Nisar Ahmad, 2014. "State Dependence in Unemployment," International Journal of Economics and Financial Issues, Econjournals, vol. 4(1), pages 93-106.
  • Handle: RePEc:eco:journ1:2014-01-10
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Immigrants; unemployment; state dependence; unobserved heterogeneity; dynamic random effects models.;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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