Unemployment and under-employment: the case of Switzerland

I analyze the effect of unemployment on subsequent employment history for Switzerland. Using administrative panel data from the unemployment insurance system and the social security databases, I estimate a discrete time hazard model for the exit from the different labor market states: unemployment, employment characterized by either earnings losses, gains or relatively stable earnings, and out-of-the labor force. I find that having previously experienced unemployment increases the risk of persistent unemployment. A further analysis based on personal characteristics such as gender, age, foreign citizenship and qualification permits to identify two profiles of unemployed persons. The “higher-risk” unemployed, namely the female, foreign and less skilled workers are prone to remain trapped in bad situations or to experience employment instability. On the contrary, the male, younger and skilled workers are more likely to exit from unemployment and if they experience earnings losses, it is more for transitory periods.