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Microeconomic analysis of unemployment persistence in Belgium


  • Amynah Vanessa Gangji
  • Robert Plasman


This study investigates the causes of unemployment persistence among the Belgian labour force. The underlying issue was to determine the impact of past unemployment spells on future labour market opportunities. Some European studies have demonstrated the existence of a true causal relationship between successive unemployment spells implying a stigmatisation effect for the unemployed. This so-called state dependence can occur through a reduction in human capital or through employer recruitment and labour retention practices. The model used is a dynamic random effects probit model controlling for unobserved heterogeneity and the initial condition problem. It was applied on the Panel Study on Belgian Households, covering the years 1994 to 2002. The results suggest that while observed and unobserved heterogeneity explain between 57% and 82% of unemployment persistence, the remainder is induced by the presence of state dependence. All else equal, an individual unemployed this year will be between 11.4 and 33 percentage points more likely to be unemployed next year as compared with an employed person. The presence of a stigmatisation effect of unemployment involves that the costs of unemployment are much higher than the simple loss of income and human capital associated to the current job loss. The study demonstrates the importance to concentrate the efforts on the prevention of unemployment.

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  • Amynah Vanessa Gangji & Robert Plasman, 2007. "Microeconomic analysis of unemployment persistence in Belgium," DULBEA Working Papers 07-20.RS, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:dul:wpaper:07-20rs

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    References listed on IDEAS

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    Cited by:

    1. Jean-Luc Demeulemeester & Olivier Debande, 2008. "Quality and Variety Competition in Higher Education," Working Papers 08-10, Association Française de Cliométrie (AFC).
    2. Bernal, Oscar & Oosterlinck, Kim & Szafarz, Ariane, 2010. "Observing bailout expectations during a total eclipse of the sun," Journal of International Money and Finance, Elsevier, vol. 29(7), pages 1193-1205, November.
    3. Luigi Aldieri, 2009. "The Effects of Unemployment Experiences on Subsequent Wages in Italy," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 52(2), pages 109-119.
    4. Ariane Szafarz, 2007. "Hiring people-like-yourself: a representation of discrimination on the job market," DULBEA Working Papers 07-21.RS, ULB -- Universite Libre de Bruxelles.
    5. Amynah Vanessa Gangji & Robert Plasman, 2007. "The Matthew effect of unemployment: how does it affect wages in Belgium," DULBEA Working Papers 07-19.RS, ULB -- Universite Libre de Bruxelles.
    6. Hassan Ayoub & Jérôme Creel & Etienne Farvaque, 2008. "Détermination du niveau des prix et finances: le cas du Liban 1965-2005," DULBEA Working Papers 08-10.RS, ULB -- Universite Libre de Bruxelles.
    7. Benoît Mahy & François Rycx & Mélanie Volral, 2008. "L'influence de la dispersion salariale sur la performance des grandes entreprises belges," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(3), pages 27-40.
    8. Charles Plaigin, 2009. "Exploratory study on the presence of cultural and institutional growth spillovers," DULBEA Working Papers 09-03.RS, ULB -- Universite Libre de Bruxelles.
    9. Sile Padraigin O'Dorchai, 2008. "Pay inequality in 25 European countries," DULBEA Working Papers 0006, ULB -- Universite Libre de Bruxelles.
    10. Pierre-Guillaume Méon & Ariane Szafarz, 2008. "Labor market discrimination as an agency cost," DULBEA Working Papers 08-19.RS, ULB -- Universite Libre de Bruxelles.
    11. Caroline Gerschlager, 2008. "Foolishness and identity: Amartya Sen and Adam Smith," DULBEA Working Papers 08-03.RS, ULB -- Universite Libre de Bruxelles.
    12. Abdeslam Marfouk, 2008. "The African brain drain: scope and determinants," DULBEA Working Papers 08-07.RS, ULB -- Universite Libre de Bruxelles.

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    unemployment persistence; state dependence; dynamic random effects probit model; unobserved heterogeneity; initial condition; Belgium;

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