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Heterogeneity in unemployment state dependence

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  • Plum, Alexander
  • Ayllón, Sara

Abstract

By applying a heterogeneous slope model, this paper shows that unemployment state dependence varies across workers. Assuming a homogeneous effect of past unemployment on the risk of staying unemployed underestimates the scarring effect of unemployment in the majority of countries analyzed.

Suggested Citation

  • Plum, Alexander & Ayllón, Sara, 2015. "Heterogeneity in unemployment state dependence," Economics Letters, Elsevier, vol. 136(C), pages 85-87.
  • Handle: RePEc:eee:ecolet:v:136:y:2015:i:c:p:85-87
    DOI: 10.1016/j.econlet.2015.09.006
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    References listed on IDEAS

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    1. Browning, Martin & Carro, Jesus M., 2014. "Dynamic binary outcome models with maximal heterogeneity," Journal of Econometrics, Elsevier, vol. 178(2), pages 805-823.
    2. Wiji Arulampalam, 1999. "A Note on Estimated Coefficients in Random Effects Probit Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(4), pages 597-602, November.
    3. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
    4. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, April.
    5. Mark B. Stewart, 2007. "The interrelated dynamics of unemployment and low-wage employment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 511-531.
    6. Wiji Arulampalam & Mark B. Stewart, 2009. "Simplified Implementation of the Heckman Estimator of the Dynamic Probit Model and a Comparison with Alternative Estimators," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(5), pages 659-681, October.
    7. Biewen, Martin & Steffes, Susanne, 2010. "Unemployment persistence: Is there evidence for stigma effects?," Economics Letters, Elsevier, vol. 106(3), pages 188-190, March.
    8. Jahoda,Marie, 1982. "Employment and Unemployment," Cambridge Books, Cambridge University Press, number 9780521285865, April.
    9. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-764, May.
    10. Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 24-50, January.
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    Citations

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    Cited by:

    1. Van Belle, Eva & Caers, Ralf & De Couck, Marijke & Di Stasio, Valentina & Baert, Stijn, 2017. "Why Is Unemployment Duration a Sorting Criterion in Hiring?," IZA Discussion Papers 10876, Institute of Labor Economics (IZA).
    2. Alexander Plum, 2018. "Stochastic Expected Utility for Binary Choice: New Representations," Working Papers 2018-08, Auckland University of Technology, Department of Economics.
    3. Alexander Plum, 2017. "Becoming unemployed and poor in Great Britain," Applied Economics Letters, Taylor & Francis Journals, vol. 24(18), pages 1289-1293, October.

    More about this item

    Keywords

    Unemployment; State dependence; Heterogeneity; ECHP;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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