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State Dependence in Unemployment among Danish Immigrants

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  • Nisar Ahmad

    () (School of Economics and Management, University of Aarhus, Denmark)

Abstract

This study examines the extent state dependence among unemployed Danish immigrants in a dynamic discrete choice framework. Three alternative methodologies are employed to control for the problem of the initial condition. The empirical findings show that there is a considerable correlation between the unobserved individual heterogeneity and the initial condition and that the degree of state dependence is overstated if we do not address this problem. The results show that an individual who was unemployed at period “t-1” has 6.5 percentage points higher probability of being unemployed again at period t compared to an individual who was employed at period “t-1”. This average partial effect is the same for western compared to non-western immigrants and women compared to men.

Suggested Citation

  • Nisar Ahmad, 2009. "State Dependence in Unemployment among Danish Immigrants," Economics Working Papers 2009-12, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2009-12
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    File URL: ftp://ftp.econ.au.dk/afn/wp/09/wp09_12.pdf
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    References listed on IDEAS

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    1. Martin, Philippe & Rogers, Carol Ann, 1997. "Stabilization Policy, Learning-by-Doing, and Economic Growth," Oxford Economic Papers, Oxford University Press, vol. 49(2), pages 152-166, April.
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    3. Hellwig, Martin & Irmen, Andreas, 2001. "Endogenous Technical Change in a Competitive Economy," Journal of Economic Theory, Elsevier, pages 1-39.
    4. Posch, Olaf, 2011. "Explaining output volatility: The case of taxation," Journal of Public Economics, Elsevier, pages 1589-1606.
    5. Posch, Olaf, 2009. "Structural estimation of jump-diffusion processes in macroeconomics," Journal of Econometrics, Elsevier, vol. 153(2), pages 196-210, December.
    6. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, pages 323-351.
    7. Annette Vissing-Jorgensen, 2002. "Limited Asset Market Participation and the Elasticity of Intertemporal Substitution," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 825-853, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Immigrants; unemployment; state dependence; unobserved heterogeneity; dynamic random effects models;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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