Microeconomic analysis of unemployment persistence in Belgium
Purpose – The purpose of this paper is to investigate the causes of unemployment persistence among the Belgian labour force. The underlying issue is to determine the eventual existence of a true causal relationship between successive unemployment spells. Design/methodology/approach – The model used is a dynamic random effects probit model controlling for unobserved heterogeneity and the initial condition problem. It was applied to the Panel Study on Belgian Households (1994-2002). Findings – The results suggest that while observed and unobserved heterogeneity explain between 57 per cent and 82 per cent of unemployment persistence, the remainder is induced by the presence of state dependence. All else being equal, an individual unemployed this year will be between 11.4 and 33 percentage points more likely to be unemployed next year as compared with an employed person. Practical implications – The presence of a stigmatisation effect of unemployment means that the costs of unemployment are much higher than the simple loss of income and human capital associated with the current job loss. The study demonstrates the importance of concentrating efforts on the prevention of unemployment. Originality/value – The paper's contribution is to test again the hypothesis of the presence of state dependence in unemployment using a different technique, allowing, among other things, to control for exogenous variables. The paper demonstrates its existence and measures its contribution in the explanation of unemployment persistence in Belgium, besides that of observed and unobserved characteristics.
Volume (Year): 29 (2008)
Issue (Month): 3 (July)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://www.emeraldinsight.com/ijm.htm Email:
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.:
- Winter-Ebmer, Rudolf, 1991. "Some Micro Evidence on Unemployment Persistence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(1), pages 27-43, February.
- Muhleisen, Martin & Zimmermann, Klaus F., 1994. "A panel analysis of job changes and unemployment," European Economic Review, Elsevier, vol. 38(3-4), pages 793-801, April.
- Arulampalam, Wiji, 2002. "State Dependence in Unemployment Incidence: Evidence for British Men Revisited," IZA Discussion Papers 630, Institute for the Study of Labor (IZA).
- Eric Cahuzac, 1998. "Past unemployment influences on the incidence of Belgian employees unemployment," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 159, pages 231-254.
- Guilkey, David K. & Murphy, James L., 1993. "Estimation and testing in the random effects probit model," Journal of Econometrics, Elsevier, vol. 59(3), pages 301-317, October.
- Wiji Arulampalam & Alison L. Booth, 2000. "Union status of young men in Britain: a decade of change," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(3), pages 289-310.
- Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
- Stéfan Lollivier, 2000. "Récurrence du chômage dans l'insertion des jeunes : des trajectoires hétérogènes," Économie et Statistique, Programme National Persée, vol. 334(1), pages 49-63.
- Lockwood, Ben, 1991. "Information Externalities in the Labour Market and the Duration of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 58(4), pages 733-53, July.
- Arulampalam, Wiji & Booth, Alison L & Taylor, Mark P, 2000. "Unemployment Persistence," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 24-50, January.
- Flaig, Gebhard & Licht, Georg & Steiner, Viktor, 1993. "Testing for state dependence effects in a dynamic model of male unemployment behaviour," ZEW Discussion Papers 93-07, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
- Narendranathan, Wiji & Elias, Peter, 1993.
"Influences of Past History on the Incidence of Youth Unemployment: Empirical Findings for the UK,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 55(2), pages 161-85, May.
- Narendranathan, W. & Elias, P., 1990. "Influences of Past History on the Incidence of Youth Unemployment: Empirical Finding for the U.K," The Warwick Economics Research Paper Series (TWERPS) 369, University of Warwick, Department of Economics.
- Jeffrey M Wooldridge, 2002.
"Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity,"
CeMMAP working papers
CWP18/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
- 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.
- 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 761-64, May.
- Winter-Ebmer, Rudolf & Zweimuller, Josef, 1992. "Do They Come Back Again? Job Search, Labour Market Segmentation and State Dependence as Explanations of Repeat Unemployment," Empirical Economics, Springer, vol. 17(2), pages 273-92.
- Arulampalam, W., 1998. "A Note on Estimated Coefficients in Random Effects Probit Models," The Warwick Economics Research Paper Series (TWERPS) 520, University of Warwick, Department of Economics.
- Gregg, Paul, 2001. "The Impact of Youth Unemployment on Adult Unemployment in the NCDS," Economic Journal, Royal Economic Society, vol. 111(475), pages F626-53, November.
When requesting a correction, please mention this item's handle: RePEc:eme:ijmpps:v:29:y:2008:i:3:p:280-298. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman)
If references are entirely missing, you can add them using this form.