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The Anatomy of Unemployment Dynamics

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  • Abbring, Jaap H
  • van den Berg, Gerard J
  • van Ours, Jan C

Abstract

This paper examines the relation between individual unemployment durations and incidence on the one hand, and the time-varying macroeconomic conditions in the economy on the other. We allow for calendar time effects acting on the exit probabilities for all currently unemployed. We also allow for the composition of the inflow into unemployment to depend on calendar time at the moment of inflow. In both cases we distinguish between business cycle effects and seasonal effects. We apply the model to aggregate unemployment duration data, in which we allow for unobserved heterogeneity and correlated measurement errors. We do not make parametric assumptions on the genuine duration dependence pattern or the unobserved heterogeneity distribution. The results enable us to give a complete decomposition of the dynamics of unemployment over calendar time. This is also used to test the popular ranking model of unemployment.

Suggested Citation

  • Abbring, Jaap H & van den Berg, Gerard J & van Ours, Jan C, 1995. "The Anatomy of Unemployment Dynamics," CEPR Discussion Papers 1202, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1202
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    More about this item

    Keywords

    Business Cycle; Duration Dependence; Seasonality; Unemployment; Unemployment Duration;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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