The Risk of marginalization in the Labour Market: Application of the Three State Dependent Competing Risks Duration Model
In this paper I apply a three-state dependent competing risks model to analyse marginalization in the Danish labour market during the 1980s. I derive the theoretical contribution of a left-censored spell (which may also be right-censored), using a piecewise exponential baseline hazard specification. Dependency between risks and time spent in various states is allowed for. The main findings are that youth unemployment was a severe problem in the 1980s, caused mainly by high transition rates into nonparticipation and unemployment, rather than low transition rates into employment. Furthermore, for a certain cohort of men, 'The lost Generation', having obtained working experience is crucial to not being marginalized, that is, there are indications of a higher degree of polarization in the labour market for this particular male cohort.
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