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The Duration of U.S. Joblessness and the Great Recession

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Abstract

We develop models of duration of unemployment, for the United States and apply them to the U.S. 1996-2020 biennial Displaced Worker Survey (DWS). Our approach has several notable features relevant to an analysis of unemployment during a deep, persistent recession. We estimate single-spell proportional hazard exponential and Weibull models of transitional probability to full employment, and we test the outcome for robustness to functional forms by distributional free estimation. We test for the impact of unobserved heterogeneity by modeling recession as a Gamma distributed unobservable frailty function commonly employed in biostatistics. We also estimate a non/semi-parametric proportional hazard Cox model of competing risks with three destinations out of unemployment: transition to full-time employment, part-time employment, and inactive job-search status. Our single-destination estimates demonstrate significant differences in the covariate estimates as a result of different base hazards defined for those during the Great Recession and those outside that period. The estimates show gender is the single most important determinant of the duration of unemployment with men's hazard rate of (re)employment to full-time jobs 7% to 15% lower. When interacted with Unemployment Insurance, being female also accounts for a 10% higher hazard of transition to full-time employment. Our competing risks regression results indicate that Black workers have 28% and 27% lower rates of exit to a full-time and part-time employment respectively following job displacement.

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  • Feridoon Koohi-Kamali & Aida Farmand & Jose Pedro Bastos Neves, 2021. "The Duration of U.S. Joblessness and the Great Recession," SCEPA working paper series. 2021-03, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepawp:2021-03
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    More about this item

    Keywords

    unemployment; duration of unemployment; Great Recession; hazard function; multiple transitions;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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