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An Analysis of the Processes of Labour Market Exclusion and (Re-) Inclusion


  • Rosholm, Michael

    () (Aarhus University)


In this paper we analyze the processes of labour market exclusion and (re-) inclusion, using a Danish register-based data set covering the period 1981-1990. The analysis is performed by estimation of reduced form transition models, the parameters of which are interpreted within the framework of search theory mixed with social psychological theories regarding unemployment and labour market exclusion. The main findings of the study are that low levels of education and working experience are associated with an increased risk of labour market exclusion. However, for the labour market (re-) inclusion process, human capital variables are not important. There is indirect evidence of psychological damaging and/or stigma effects of unemployment and nonparticipation. There is also evidence of budget constraints that eventually lead to decreasing reservation wages or increasing search intensity, as unemployment spells become very long. We discuss some policy implications of our findings.

Suggested Citation

  • Rosholm, Michael, 2001. "An Analysis of the Processes of Labour Market Exclusion and (Re-) Inclusion," IZA Discussion Papers 332, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp332

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    References listed on IDEAS

    1. Peter Spencer, 2001. "E-money: Will it Take Off?," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(1), pages 121-136, January.
    2. Timothy J. Hatton & Jeffrey G. Williamson, 2003. "Demographic and Economic Pressure on Emigration out of Africa," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 465-486, September.
    3. Gersbach, Hans & Schniewind, Achim, 2001. "Product Market Reforms and Unemployment in Europe," IZA Discussion Papers 255, Institute for the Study of Labor (IZA).
    4. Gersbach, Hans & Schniewind, Achim, 2001. "Learning of General Equilibrium Effects and the Unemployment Trap," IZA Discussion Papers 254, Institute for the Study of Labor (IZA).
    5. Yemtsov, Ruslan, 2001. "Labor Markets, Inequality and Poverty in Georgia," IZA Discussion Papers 251, Institute for the Study of Labor (IZA).
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    Cited by:

    1. Agne Lauzadyte, 2007. "A Statistical Programme Assignment Model," Economics Working Papers 2007-18, Department of Economics and Business Economics, Aarhus University.
    2. Rune Lesner, 2015. "Does labor market history matter?," Empirical Economics, Springer, vol. 48(4), pages 1327-1364, June.
    3. Ana Flavia Machado & Rafael Perez Ribas, 2010. "Do Changes in the Labour Market Take Families Out of Poverty? Determinants of Exiting Poverty in Brazilian Metropolitan Regions," Journal of Development Studies, Taylor & Francis Journals, vol. 46(9), pages 1503-1522.

    More about this item


    Labour market exclusion and inclusion; multiple state duration model; left-censoring; unobserved heterogeneity;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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