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Unemployment duration and the role of compositional variation: evidence from a period of economic crisis in Finland

Listed author(s):
  • Jouko Verho

    ()

The recession of the early 1990s caused a serious unemployment problem in Finland. This study investigates the role of compositional variation in unemployment duration using individual data on Finnish workers. The compositional effect is examined by predicting the impact of the observed unemployment inflow heterogeneity on aggregate re-employment rates. Focusing on a recession period provides useful variation for the analysis due to large increase in the unemployment inflow. According to the results, the aggregate outflow effect dominates and the observed compositional variation implies only a small increasing trend in the average duration during the recession period. Copyright Springer-Verlag Berlin Heidelberg 2014

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File URL: http://hdl.handle.net/10.1007/s00181-013-0732-3
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Article provided by Springer in its journal Empirical Economics.

Volume (Year): 47 (2014)
Issue (Month): 1 (August)
Pages: 35-56

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Handle: RePEc:spr:empeco:v:47:y:2014:i:1:p:35-56
DOI: 10.1007/s00181-013-0732-3
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Order Information: Web: http://www.springer.com/economics/econometrics/journal/181/PS2

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  1. 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 436-448, October.
  2. 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.
  3. Gary Solon & Ryan Michaels & Michael W. L. Elsby, 2009. "The Ins and Outs of Cyclical Unemployment," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 84-110, January.
  4. Guido Imbens & Lisa Lynch, 2006. "Re-employment probabilities over the business cycle," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 5(2), pages 111-134, August.
  5. Darby, Michael R & Haltiwanger, John C & Plant, Mark W, 1985. "Unemployment Rate Dynamics and Persistent Unemployment under Rational Expectations," American Economic Review, American Economic Association, vol. 75(4), pages 614-637, September.
  6. Michael Rosholm, 2001. "Cyclical variations in unemployment duration," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(1), pages 173-191.
  7. Seppo Honkapohja & Erkki Koskela, 1999. "The economic crisis of the 1990s in Finland," Economic Policy, CEPR;CES;MSH, vol. 14(29), pages 399-436, October.
  8. Abbring, Jaap H. & van den Berg, Gerard J. & van Ours, Jan C., 2002. "The anatomy of unemployment dynamics," European Economic Review, Elsevier, vol. 46(10), pages 1785-1824, December.
  9. Baker, Michael, 1992. "Unemployment Duration: Compositional Effects and Cyclical Variability," American Economic Review, American Economic Association, vol. 82(1), pages 313-321, March.
  10. Tomi Kyyrä & Ralf A. Wilke, 2007. "Reduction in the Long-Term Unemployment of the Elderly: A Success Story from Finland," Journal of the European Economic Association, MIT Press, vol. 5(1), pages 154-182, 03.
  11. Helene Turon, 2003. "Inflow Composition, Duration Dependence and Their Impact on The Unemployment Outflow Rate," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(1), pages 31-47, February.
  12. 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, February.
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