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Employment Risk over the Life Cycle

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Listed author(s):
  • Carolina Fugazza
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    Abstract

    In this paper we focus on the relative role of job finding and job exit in shaping the employment risk over the life cycle. Using Italian labor market data we document that the risk of being fired and the chance of reemployment display substantial heterogeneity depending on age, cohort and occupational characteristics. We show how the two risk combine in shaping the employment risk. Our results evidence that the life cycle employment probability profile is hump shaped with a peak at adult age and that this dynamic is mainly driven by the “U” –age profile of transitions from employment to unemployment. Moreover, we find that differences in job finding probabilities are mainly responsible for the heterogeneity in the employment risk across working groups.

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    File URL: http://www.carloalberto.org/assets/working-papers/no.280.pdf
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    Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 280.

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    Length: 24 pages
    Date of creation: 2012
    Handle: RePEc:cca:wpaper:280
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    Keywords: Employment risk; Duration; Heterogeneity; Semi-Markov Process;

    Find related papers by JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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    1. Gerard J. van den Berg, 1990. "Nonstationarity in Job Search Theory," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 255-277.
    2. Petrongolo, Barbara, 2001. "Reemployment Probabilities and Returns to Matching," Journal of Labor Economics, University of Chicago Press, vol. 19(3), pages 716-741, July.
    3. Christopher D. Carroll & Karen E. Dynan & Spencer D. Krane, 2003. "Unemployment Risk and Precautionary Wealth: Evidence from Households' Balance Sheets," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 586-604, August.
    4. Olympia Bover & Manuel Arellano & Samuel Bentolila, 2002. "Unemployment Duration, Benefit Duration and the Business Cycle," Economic Journal, Royal Economic Society, vol. 112(479), pages 223-265, April.
    5. Vishwanath, Tara, 1989. "Job Search, Stigma Effect, and Escape Rate from Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 487-502, October.
    6. Lynch, Lisa M, 1989. "The Youth Labor Market in the Eighties: Determinants of Re-employment Probabilities for Young Men and Women," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 37-45, February.
    7. Stuart O. Schweitzer & Ralph E. Smith, 1974. "The Persistence of the Discouraged Worker Effect," ILR Review, Cornell University, ILR School, vol. 27(2), pages 249-260, January.
    8. Gabriella Berloffa & Peter Simmons, 2003. "Unemployment Risk, Labour Force Participation and Savings," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 521-539.
    9. Voicu, Alexandru, 2005. "Employment dynamics in the Romanian labor market. A Markov chain Monte Carlo approach," Journal of Comparative Economics, Elsevier, vol. 33(3), pages 604-639, September.
    10. Christopher A. Pissarides, 1992. "Loss of Skill During Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1371-1391.
    11. Antoni Calvó-Armengol & Matthew O. Jackson, 2004. "The Effects of Social Networks on Employment and Inequality," American Economic Review, American Economic Association, vol. 94(3), pages 426-454, June.
    12. Gregg, Paul, 2001. "The Impact of Youth Unemployment on Adult Unemployment in the NCDS," Economic Journal, Royal Economic Society, vol. 111(475), pages 626-653, November.
    13. Hall, Robert E., 1979. "A theory of the natural unemployment rate and the duration of employment," Journal of Monetary Economics, Elsevier, vol. 5(2), pages 153-169, April.
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