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Explaining Non-Negative Duration Dependence Among the Unemployed

  • Pieter Serneels

We investigate why we observe non-negative duration dependence among young unemployed men in urban Ethiopia. Assuming that genuine duration dependence is negative, there are five explanations for a non-decreasing hazard: the presence of unemployment benefits, the existence of Active Labour Market Policies, the change in labour demand, segmentation of the labour market, and unemployment as a queuing phenomenon. We test each of these explanations and find that labour market segmentation is the only convincing one. We also establish that genuine duration dependence is indeed negative in the long run.

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Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2002-13.

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