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Censored Quantile Regressions and the Length of Unemployment Periods in West Germany

  • Xuan, Zhang
  • Wilke, Ralf A.
  • Lüdemann, Elke

In this paper, we estimate the effect of different macro and micro variables on thedistribution of unemployment duration in West Germany using censored quantile regressions. We analyze unemployment periods of more than 91,000 observations from the years 1981 to 1997 drawn from the IAB employment subsample. The latter is an administrative data set that is representative with respect to the socially insured workforce. Surprisingly, we find that the educational degree and variables indicating the macroeconomic environment such as the unemployment rate have a weak effect only. On the other hand, variables reflecting the (un-)employment history of an individual such as the length of tenure, recall to the same employer in the past, recent unemployment and the position in the population income distribution before unemployment have the strongest effects on unemployment duration. We conclude that work history variables are the ones most suitable in characterizing the unemployment duration of an individual. From a methodological point of view, it is interesting that some regression coefficients have a different sign depending on the quantiles of the unemployment duration distribution. This clearly is a violation of the classical proportional hazard assumption which is very common in unemployment duration analysis.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-57 [rev.].

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Date of creation: 2005
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Handle: RePEc:zbw:zewdip:7180
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  1. Weber, Andrea Maria, 2004. "Wann kehren junge Mütter auf den Arbeitsmarkt zurück? Eine Verweildaueranalyse für Deutschland," ZEW Discussion Papers 04-08, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Hunt, Jennifer, 1995. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 88-120, January.
  3. Ralf A. Wilke, 2005. "New Extimates of the Duration and Risk of Unemployment for West-Germany," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 125(2), pages 207-237.
  4. Yannis Bilias & Roger Koenker, 2001. "Quantile regression for duration data: A reappraisal of the Pennsylvania Reemployment Bonus Experiments," Empirical Economics, Springer, vol. 26(1), pages 199-220.
  5. 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.
  6. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  7. Koenker R. & Geling O., 2001. "Reappraising Medfly Longevity: A Quantile Regression Survival Analysis," Journal of the American Statistical Association, American Statistical Association, vol. 96, pages 458-468, June.
  8. Powell, James L., 1986. "Censored regression quantiles," Journal of Econometrics, Elsevier, vol. 32(1), pages 143-155, June.
  9. Lauer, Charlotte, 2003. "Education and Unemployment: A French-German Comparison," ZEW Discussion Papers 03-34, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Hahn, Jinyong, 1995. "Bootstrapping Quantile Regression Estimators," Econometric Theory, Cambridge University Press, vol. 11(01), pages 105-121, February.
  11. Powell, James L., 1984. "Least absolute deviations estimation for the censored regression model," Journal of Econometrics, Elsevier, vol. 25(3), pages 303-325, July.
  12. repec:cup:etheor:v:11:y:1995:i:1:p:105-21 is not listed on IDEAS
  13. Jose A. F. Machado & Jose Mata, 2000. "Box-Cox quantile regression and the distribution of firm sizes," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(3), pages 253-274.
  14. Roger Koenker & Zhijie Xiao, 2002. "Inference on the Quantile Regression Process," Econometrica, Econometric Society, vol. 70(4), pages 1583-1612, July.
  15. Portnoy S., 2003. "Censored Regression Quantiles," Journal of the American Statistical Association, American Statistical Association, vol. 98, pages 1001-1012, January.
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