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The distribution of unemployment by age and the unemployment rate: A puzzle?

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  • Ochsen, Carsten

Abstract

This paper examines the effects of the distribution of unemployment by age on the level of unemployment. We provide an extension of the standard equilibrium unemployment model that allows for age dependent job finding probabilities and quit rates. In the empirical part of the paper we apply a panel estimator on data for a set of OECD countries to test the implications of the theoretical model. The results provide the somewhat surprising evidence that the distribution of unemployment by age has a hump-shape effect on the unemployment rate.

Suggested Citation

  • Ochsen, Carsten, 2008. "The distribution of unemployment by age and the unemployment rate: A puzzle?," Thuenen-Series of Applied Economic Theory 89, University of Rostock, Institute of Economics.
    • Handle: RePEc:zbw:roswps:89
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    References listed on IDEAS

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    1. Pissarides, Christopher A. & Wadsworth, Jonathan, 1994. "On-the-job search: Some empirical evidence from Britain," European Economic Review, Elsevier, vol. 38(2), pages 385-401, February.
    2. Robert Shimer, 2001. "The Impact of Young Workers on the Aggregate Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 969-1007.
    3. Coles, Melvyn G & Smith, Eric, 1996. "Cross-Section Estimation of the Matching Function: Evidence from England and Wales," Economica, London School of Economics and Political Science, vol. 63(252), pages 589-597, November.
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    More about this item

    Keywords

    Distribution of Unemployment by Age; Duration of Unemployment;

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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