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Does labor market history matter?

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  • Rune Lesner

Abstract

This paper finds that labor market history plays an important role in the Danish labor market both by directly affecting the transitions between labor market states and indirectly through the wage. When comparing the relative importance of different types of state dependence, it is found that occurrence dependence from non-employment states seems to have the strongest effect on the employment rate, while employment history is the main driver of state dependence in the wage. Predictions based on the estimated model reveal potential negative long-term effects from external employment shocks and potential positive benefits from employment programs for long-term unemployed. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Rune Lesner, 2015. "Does labor market history matter?," Empirical Economics, Springer, vol. 48(4), pages 1327-1364, June.
  • Handle: RePEc:spr:empeco:v:48:y:2015:i:4:p:1327-1364
    DOI: 10.1007/s00181-014-0826-6
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    More about this item

    Keywords

    State dependence; Wage distribution; Youth unemployment; C33; C41; J31; J64;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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