IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp4025.html
   My bibliography  Save this paper

Persistencies in the Labour Market

Author

Listed:
  • Frijters, Paul

    (London School of Economics)

  • Lindeboom, Maarten

    (Vrije Universiteit Amsterdam)

  • van den Berg, Gerard J.

    (University of Groningen)

Abstract

Using longitudinal income-tax registers, we study how past labour market outcomes affect current labour market transition rates. We focus on hysteresis effects of the durations and incidence of previous spells out of work. We estimate flexible multi-state Mixed Proportional Hazard specifications for transition rates between employment, unemployment, and welfare/non-participation. Our main finding is that after longer periods of employment with high income, individuals' transition rates from unemployment to employment increase. Longer periods of non-employment generally decrease future transition rates to work, and sometimes also from work. The quantitative magnitude of persistency and hysteresis effects on inequality is modest.

Suggested Citation

  • Frijters, Paul & Lindeboom, Maarten & van den Berg, Gerard J., 2009. "Persistencies in the Labour Market," IZA Discussion Papers 4025, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4025
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp4025.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Philip de Jong & Maarten Lindeboom & Bas van der Klaauw, 2011. "Screening Disability Insurance Applications," Journal of the European Economic Association, European Economic Association, vol. 9(1), pages 106-129, February.
    2. Lars Ljungqvist & Thomas J. Sargent, 1998. "The European Unemployment Dilemma," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 514-550, June.
    3. Lindbeck, Assar, 1995. "Hazardous Welfare-State Dynamics," American Economic Review, American Economic Association, vol. 85(2), pages 9-15, May.
    4. D'Addio, Anna Cristina & Honoré, Bo E., 2010. "Duration Dependence and Timevarying Variables in Discrete Time Duration Models," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 30(2), December.
    5. Omori, Yoshiaki, 1997. "Stigma Effects of Nonemployment," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 394-416, April.
    6. Blau, David M, 1994. "Labor Force Dynamics of Older Men," Econometrica, Econometric Society, vol. 62(1), pages 117-156, January.
    7. Burgess, Simon & Propper, Carol & Rees, Hedley & Shearer, Arran, 2003. "The class of 1981: the effects of early career unemployment on subsequent unemployment experiences," Labour Economics, Elsevier, vol. 10(3), pages 291-309, June.
    8. Jolanda Van Leeuwen & Jeroen Pannekoek, 2002. "To Work Oneself out of Poverty: The Dutch Experience 1989–96," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(1), pages 127-140, March.
    9. Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460, Elsevier.
    10. Choi, HwaJung & Shin, Donggyun, 2002. "Do past unemployment spells affect the duration of current unemployment?," Economics Letters, Elsevier, vol. 77(2), pages 157-161, October.
    11. Gregg, Paul, 2001. "The Impact of Youth Unemployment on Adult Unemployment in the NCDS," Economic Journal, Royal Economic Society, vol. 111(475), pages 626-653, November.
    12. Arulampalam, Wiji, 2002. "State Dependence in Unemployment Incidence: Evidence for British Men Revisited," IZA Discussion Papers 630, Institute of Labor Economics (IZA).
    13. Lindeboom, M. & Van Der Berg, G.J., 1991. "Heterogeneity in Models for Bivariate Survival : the Importance of the Mixing Distribution," Papers 430, Groningen State, Institute of Economic Research-.
    14. Audra J. Bowlus & Jean-Marc Robin, 2004. "Twenty Years of Rising Inequality in U.S. Lifetime Labour Income Values," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(3), pages 709-742.
    15. van Leeuwen, Jolanda & Pannekoek, Jeroen, 2002. "To Work Oneself Out of Poverty: The Dutch Experience 1989-96," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(1), pages 127-140, March.
    16. Audra Bowlus & Jean-Marc Robin, 2004. "Twenty Years of Rising Inequality in U.S. Lifetime Labour Income Values," Post-Print hal-03416773, HAL.
    17. Anthony B. Atkinson & Wiemer Salverda, 2005. "Top Incomes In The Netherlands And The United Kingdom Over The 20th Century," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 883-913, June.
    18. Cohen, Daniel, 1999. "Welfare Differentials Across French and US Labour Markets," CEPR Discussion Papers 2114, C.E.P.R. Discussion Papers.
    19. Lynch, Lisa M, 1989. "The Youth Labor Market in the Eighties: Determinants of Re-employment Probabilities for Young Men and Women," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 37-45, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mark B. Stewart, 2007. "The interrelated dynamics of unemployment and low-wage employment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 511-531.
    2. Axelrad, Hila & Luski, Israel & Malul, Miki, 2016. "Behavioral biases in the labor market, differences between older and younger individuals," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 60(C), pages 23-28.
    3. Nisar Ahmad, 2014. "State Dependence in Unemployment," International Journal of Economics and Financial Issues, Econjournals, vol. 4(1), pages 93-106.
    4. Rune Lesner, 2015. "Does labor market history matter?," Empirical Economics, Springer, vol. 48(4), pages 1327-1364, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bemjamin Villena-Roldan, 2009. "Aggregate Implications of Employer Search and Recruiting Selection," 2009 Meeting Papers 97, Society for Economic Dynamics.
    2. Stefan Eriksson & Dan-Olof Rooth, 2014. "Do Employers Use Unemployment as a Sorting Criterion When Hiring? Evidence from a Field Experiment," American Economic Review, American Economic Association, vol. 104(3), pages 1014-1039, March.
    3. Jolivet, Grégory, 2009. "A longitudinal analysis of search frictions and matching in the U.S. labor market," Labour Economics, Elsevier, vol. 16(2), pages 121-134, April.
    4. Josep Pijoan-Mas & Hernan Ruffo & Claudio Michelacci, 2012. "Inequality in Unemployment Risk and in Wages," 2012 Meeting Papers 794, Society for Economic Dynamics.
    5. Mark B. Stewart, 2007. "The interrelated dynamics of unemployment and low-wage employment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 511-531.
    6. Mattia Filomena, 2021. "Unemployment Scarring Effects: A Symposium On Empirical Literature," Working Papers 453, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    7. Biewen, Martin & Steffes, Susanne, 2010. "Unemployment persistence: Is there evidence for stigma effects?," Economics Letters, Elsevier, vol. 106(3), pages 188-190, March.
    8. Giulia Martina Tanzi, 2020. "Scars of youth non-employment and labour market conditions," Temi di discussione (Economic working papers) 1312, Bank of Italy, Economic Research and International Relations Area.
    9. Giulia Martina Tanzi, 2023. "Scars of Youth Non-employment and Labour Market Conditions," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(2), pages 475-499, July.
    10. Adler, Matthew D. & Ferranna, Maddalena & Hammitt, James K. & Treich, Nicolas, 2021. "Fair innings? The utilitarian and prioritarian value of risk reduction over a whole lifetime," Journal of Health Economics, Elsevier, vol. 75(C).
    11. Stijn Baert & Bas van der Klaauw & Gijsbert van Lomwel, 2018. "The effectiveness of medical and vocational interventions for reducing sick leave of self‐employed workers," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 139-152, February.
    12. Zsófia L. Bárány, 2016. "The Minimum Wage and Inequality: The Effects of Education and Technology," Journal of Labor Economics, University of Chicago Press, vol. 34(1), pages 237-274.
    13. Paul Frijters & Bas van der Klaauw, 2006. "Job Search with Nonparticipation," Economic Journal, Royal Economic Society, vol. 116(508), pages 45-83, January.
    14. repec:hal:spmain:info:hdl:2441/4jgjdlef848r49dq2dv8go26r7 is not listed on IDEAS
    15. Tejada, Mauricio M., 2016. "Lifetime inequality measures for an emerging economy: The case of Chile," Labour Economics, Elsevier, vol. 42(C), pages 1-15.
    16. Fabien Postel-Vinay & Hélène Turon, 2007. "The Public Pay Gap in Britain: Small Differences That (Don't?) Matter," Economic Journal, Royal Economic Society, vol. 117(523), pages 1460-1503, October.
    17. Bart Cockx & Matteo Picchio, 2012. "Are Short-lived Jobs Stepping Stones to Long-Lasting Jobs?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(5), pages 646-675, October.
    18. Garnero, Andrea & Hijzen, Alexander & Martin, Sébastien, 2019. "More unequal, but more mobile? Earnings inequality and mobility in OECD countries," Labour Economics, Elsevier, vol. 56(C), pages 26-35.
    19. Torben M. Andersen, 2016. "Automatic stabilizers—the intersection of labour market and fiscal policies," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-18, December.
    20. Walentin Karl, 2010. "Earnings Inequality and the Equity Premium," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-23, November.

    More about this item

    Keywords

    hazard rates; unemployment; wages; inequality; hysteresis; duration analysis; employment; income; work;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp4025. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.