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Why did the average duration of unemployment become so much longer?

  • Mukoyama, Toshihiko
  • Sahin, Aysegl

There has been a substantial increase in the average duration of unemployment relative to the unemployment rate in the U.S. over the last 30 years. We evaluate the performance of a standard job-search model in explaining this phenomenon. In particular, we examine whether the increase in within-group wage inequality and the decline in the incidence of unemployment can account for the increase in unemployment duration. The results indicate that these two changes can explain a significant part of the increase over the last 30 years, although the model fails to match the behavior of unemployment duration during 1980s.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 56 (2009)
Issue (Month): 2 (March)
Pages: 200-209

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Handle: RePEc:eee:moneco:v:56:y:2009:i:2:p:200-209
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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