Unemployment Duration: Competing and Defective Risks
This paper examines the determinants of unemployment duration in a competing risks framework with two destination states, namely, inactivity and employment. The major innovation is our recognition of defective risks. We first use a polynomial hazard function to test for the presence of two-sources of defective risks: search involving a random process of unlucky draws that yields a non-proper duration distribution; and a split-population model in which the decision by some individuals not to consider certain destination states produces a defective distribution. Having established the primacy of the latter model, we refine it using a more flexible piecewise-constant baseline hazard function. This specification broadly confirms our earlier findings but offers a more convincing explanation for positive and zero transition rates out of unemployment. Although we do not reject the null of proportionality, abandoning the proportionality assumption does not materially alter our conclusions.
|Date of creation:||Aug 2001|
|Date of revision:|
|Publication status:||published in: Journal of Human Resources, 2003, 38 (1), 156-191|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bruce D. Meyer, 1988.
"Unemployment Insurance And Unemployment Spells,"
NBER Working Papers
2546, National Bureau of Economic Research, Inc.
- Christopher J. Flinn & James J. Heckman, 1982.
"Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?,"
NBER Working Papers
0979, National Bureau of Economic Research, Inc.
- Flinn, Christopher J & Heckman, James J, 1983. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," Journal of Labor Economics, University of Chicago Press, vol. 1(1), pages 28-42, January.
- Addison, John T. & Portugal, Pedro, 1998.
"Job Search Methods and Outcomes,"
ZEW Discussion Papers
98-41, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Olympia Bover & Pilar García-Perea & Pedro Portugal, 2000. "Labour market outliers: Lessons from Portugal and Spain," Economic Policy, CEPR;CES;MSH, vol. 15(31), pages 379-428, October.
- Schmidt, Peter & Witte, Ann Dryden, 1989.
"Predicting criminal recidivism using 'split population' survival time models,"
Journal of Econometrics,
Elsevier, vol. 40(1), pages 141-159, January.
- Peter Schmidt & Ann Dryden Witte, 1987. "Predicting Criminal Recidivism Using "Split Population" Survival Time Models," NBER Working Papers 2445, National Bureau of Economic Research, Inc.
- Blanchard, Olivier Jean & Diamond, Peter A, 1994.
"Ranking, Unemployment Duration, and Wages,"
Review of Economic Studies,
Wiley Blackwell, vol. 61(3), pages 417-34, July.
- Olivier Jean Blanchard & Peter Diamond, 1990. "Ranking, Unemployment Duration, and Wages," NBER Working Papers 3387, National Bureau of Economic Research, Inc.
- Blanchard, O.J. & Diamond, P., 1990. "Ranking, Unemployment Duration, And Wages," Working papers 546, Massachusetts Institute of Technology (MIT), Department of Economics.
- Ljungqvist, Lars & Sargent, Thomas J., 1997.
"The European Unemployment Dilemma,"
Working Paper Series
481, Research Institute of Industrial Economics.
- Lars Ljungqvist & Thomas J. Sargent, 1995. "The European unemployment dilemma," Working Paper Series, Macroeconomic Issues 95-17, Federal Reserve Bank of Chicago.
- Lars Ljungqvist & Thomas J. Sargent, 1996. "The European Unemployment Dilemma," EUI-RSCAS Working Papers 36, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
- Ljungqvist, Lars & Sargent, Thomas J., 1997. "The European Unemployment Dilemma," SSE/EFI Working Paper Series in Economics and Finance 178, Stockholm School of Economics.
- Ridder, Geert & van den Berg, Gerard J., 2002. "A cross-country comparison of labor market frictions," Working Paper Series 2002:22, IFAU - Institute for Evaluation of Labour Market and Education Policy.
- Fallick, Bruce Chelimsky, 1991.
"Unemployment Insurance and the Rate of Re-employment of Displaced Workers,"
The Review of Economics and Statistics,
MIT Press, vol. 73(2), pages 228-35, May.
- Bruce K. Fallick, 1989. "Unemployment Insurance and the Rate of Re-Employment of Displaced Workers," UCLA Economics Working Papers 550, UCLA Department of Economics.
- Han, Aaron & Hausman, Jerry A, 1990. "Flexible Parametric Estimation of Duration and Competing Risk Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(1), pages 1-28, January-M.
- Christopher J. Flinn & James J. Heckman, 1982. "Models for the Analysis of Labor Force Dynamics," NBER Working Papers 0857, National Bureau of Economic Research, Inc.
- Christopher J. Flinn, 1986. "Econometric Analysis of CPS-Type Unemployment Data," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 456-484.
- Jovanovic, Boyan, 1979.
"Job Matching and the Theory of Turnover,"
Journal of Political Economy,
University of Chicago Press, vol. 87(5), pages 972-90, October.
- Narendranathan, W. & Stewart, M.B., 1989. "Modelling The Probability Of Leaving Unemployment: Competing Risks Models With Flexible Baseline Hazards," The Warwick Economics Research Paper Series (TWERPS) 331, University of Warwick, Department of Economics.
- Pedro Portugal & Olivier Blanchard, 2001. "What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets," American Economic Review, American Economic Association, vol. 91(1), pages 187-207, March.
- Portugal, Pedro & Addison, John T, 1995. "Short- and Long-Term Unemployment. A Parametric Model with Time-Varying Effects," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(2), pages 205-27, May.
- Bart L. W. Cockx, 2000. "Analysis Of Transition Data By The Minimum-Chi-Square Method: An Application To Welfare Spells In Belgium," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 392-405, August.
- Olivier Blanchard & Pedro Portugal, 1998.
"What Hides Behind An Unemployment Rate: Comparing Portuguese and Us Unemployment,"
w199803, Banco de Portugal, Economics and Research Department.
- Olivier Blanchard & Pedro Portugal, 1998. "What Hides Behind an Umemployment Rate: Comparing Portuguese and U.S. Unemployment," NBER Working Papers 6636, National Bureau of Economic Research, Inc.
- Pudney, Stephen & Thomas, Jonathan, 1995. "Specification Tests for the Competing Risks Duration Model: An Application to Unemployment Duration and Sectoral Movement," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(3), pages 323-47, August.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp350. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.