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Duration dependence in the exit rate out of unemployment in Belgium. Is it true or spurious?

  • Muriel Dejemeppe

    (Fonds National de la Recherche Scientifique and Institut de Recherches Economiques et Sociales, Université catholique de Louvain, Belgium)

  • Bart Cockx

    (Département des Sciences Economiques and Institut de Recherches Economiques et Sociales, Université catholique de Louvain, Belgium)

On the basis of aggregate data for the early 1990s, we analyse the determinants of unemployment duration for laid-off male workers in Wallonia (Belgium). Our results indicate that if ranking in recruitment occurs, the standard mixed proportional hazard specification can be too restrictive, leading to an overstatement of the extent of true negative duration dependence. We conclude that negative duration dependence is largely spurious. We also decompose the time variation of the hazard in (unobserved) compositional and direct cyclical and seasonal effects. We find counter-cyclical variation in the quality of young workers, but none for the prime aged. Copyright © 2004 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jae.761
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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 20 (2005)
Issue (Month): 1 ()
Pages: 1-23

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Handle: RePEc:jae:japmet:v:20:y:2005:i:1:p:1-23
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  1. Jaap H. Abbring & Gerard J. Van Den Berg, 2007. "The unobserved heterogeneity distribution in duration analysis," Biometrika, Biometrika Trust, vol. 94(1), pages 87-99.
  2. Michael Baker & Angelo Melino, 1999. "Duration Dependence and Nonparametric Heterogeneity: A Monte Carlo Study," Working Papers melino-99-01, University of Toronto, Department of Economics.
  3. Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-56, July.
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  9. Abbring, Jaap H & van den Berg, Gerard J & van Ours, Jan C, 2001. "Business Cycles and Compositional Variation in U.S. Unemployment," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(4), pages 436-48, October.
  10. Kalwij, Adriaan, 2001. "Individuals' Unemployment Durations over the Business Cycle," IZA Discussion Papers 369, Institute for the Study of Labor (IZA).
  11. Muriel Dejemeppe & Yves Saks, 2002. "A New Light into Regional Unemployment Disparities in Belgium : Longitudinal Analysis of Grouped Duration Data," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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  17. D’ADDIO, Anna Christina, 1998. "Unemployment durations of French young people," CORE Discussion Papers 1998051, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  18. Michael Rosholm, 2001. "Cyclical variations in unemployment duration," Journal of Population Economics, Springer, vol. 14(1), pages 173-191.
  19. Muriel Dejemeppe, 2005. "A Complete Decomposition of Unemployment Dynamics using Longitudinal Grouped Duration Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(1), pages 47-70, 02.
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  24. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, vol. 47(5), pages 1249-66, September.
  25. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
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  27. Godfrey, Leslie G, 1978. "Testing against General Autoregressive and Moving Average Error Models When the Regressors Include Lagged Dependent Variables," Econometrica, Econometric Society, vol. 46(6), pages 1293-1301, November.
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