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Why did the average duration of unemployment become so much longer?

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Author Info
Mukoyama, Toshihiko
Sahin, Aysegl

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Abstract

There has been a substantial increase in the average duration of unemployment relative to the unemployment rate in the U.S. over the last 30 years. We evaluate the performance of a standard job-search model in explaining this phenomenon. In particular, we examine whether the increase in within-group wage inequality and the decline in the incidence of unemployment can account for the increase in unemployment duration. The results indicate that these two changes can explain a significant part of the increase over the last 30 years, although the model fails to match the behavior of unemployment duration during 1980s.

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Publisher Info
Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 56 (2009)
Issue (Month): 2 (March)
Pages: 200-209
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Handle: RePEc:eee:moneco:v:56:y:2009:i:2:p:200-209

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Web page: http://www.elsevier.com/locate/inca/505566

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Keywords: Unemployment duration Wage dispersion Job search model;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  2. Peter Gottschalk & Robert Moffitt, 1994. "The Growth of Earnings Instability in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1994-2), pages 217-272. [Downloadable!]
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  4. Katherine Baicker & Claudia Goldin & Lawrence F. Katz, 1997. "A Distinctive System: Origins and Impact of U.S. Unemployment Compensation," NBER Working Papers 5889, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Katz, Lawrence F & Murphy, Kevin M, 1992. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 35-78, February. [Downloadable!] (restricted)
    Other versions:
  6. Chinhui Juhn & Kevin Murphy & Robert Topel, 2002. "Current Unemployment, Historically Contemplated," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2002-1), pages 79-136. [Downloadable!]
  7. Baker, Michael, 1992. "Unemployment Duration: Compositional Effects and Cyclical Variability," American Economic Review, American Economic Association, vol. 82(1), pages 313-21, March. [Downloadable!] (restricted)
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  11. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier. [Downloadable!] (restricted)
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  14. Ehrenberg, Ronald G & Oaxaca, Ronald L, 1976. "Unemployment Insurance, Duration of Unemployment, and Subsequent Wage Gain," American Economic Review, American Economic Association, vol. 66(5), pages 754-66, December. [Downloadable!] (restricted)
  15. Giovanni L. Violante, 2002. "Technological Acceleration, Skill Transferability, And The Rise In Residual Inequality," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 297-338, February. [Downloadable!] (restricted)
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  16. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June. [Downloadable!] (restricted)
  17. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-56, July. [Downloadable!] (restricted)
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  18. McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February. [Downloadable!] (restricted)
  19. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
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  1. José A.F. Machado & Pedro Portugal & Juliana Guimaraes, 2006. "U.S. Unemployment Duration: Has Long Become Longer or Short Become Shorter?," IZA Discussion Papers 2174, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Thomas B. King, 2005. "Labor productivity and job-market flows: trends, cycles, and correlations," Supervisory Policy Analysis Working Papers 2005-04, Federal Reserve Bank of St. Louis. [Downloadable!]
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