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Re-Employment Probabilities over the Business Cycle

  • Imbens, Guido W.

    ()

    (Stanford University)

  • Lynch, Lisa M.

    ()

    (Brandeis University)

Using a Cox proportional hazard model that allows for a flexible time dependence in order to incorporate business cycle effects, we analyze the determinants of reemployment probabilities of young workers in the U.S. from 1978-1989. We find considerable changes in the chances of young workers finding jobs over the business cycle despite the fact that personal characteristics of those starting jobless spells do not vary much over time. Therefore, government programs that target specific demographic groups may change individuals’ positions within the queue of job seekers, but may only have a more limited impact on average re-employment probabilities. Living in an area with high local unemployment reduces re-employment chances as does being in a long spell of non-employment. However, the damage associated with being in a long spell seems to be reduced somewhat if a worker is unemployed in an area with high overall unemployment.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2167.

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Length: 45 pages
Date of creation: Jun 2006
Date of revision:
Publication status: published in: Portuguese Economic Journal, 2006, 5 (2), 111-134
Handle: RePEc:iza:izadps:dp2167
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