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Inflow Composition, Duration Dependence and their Impact on the Unemployment Outflow Rate

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  • Hélène Turon

Abstract

This paper presents estimates of the components of the dynamics of the unemployment outflow rate with British data. We allow both the composition of the inflow and individual duration dependence to vary over the business cycle. We find the inflow composition to be strongly countercyclical. Individual exit rates are found to be substatntially more sensitive to the business cycle than previously thought and than the average exit rate fluctuations suggest. Cyclical variations in duration dependence are not significant. With our estimates, fluctuations in the average exit rate out of the first year of unemployment are mainly accounted for by variations of individual exit rates, variation of inflow composition, and variation in the inflow level combined with the duration dependence phenomenon.

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  • Hélène Turon, 2003. "Inflow Composition, Duration Dependence and their Impact on the Unemployment Outflow Rate," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(1), pages 31-47, February.
    • Handle: RePEc:bla:obuest:v:65:y:2003:i:1:p:31-47
    DOI: 10.1111/1468-0084.00039
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    Cited by:

    1. Güell, Maia & Lafuente, Cristina, 2022. "Revisiting the determinants of unemployment duration: Variance decomposition à la ABS in Spain," Labour Economics, Elsevier, vol. 78(C).
    2. Adriaan Kalwij, 2010. "Unemployment durations and the pattern of duration dependence over the business cycle of British males," Empirical Economics, Springer, vol. 38(2), pages 429-456, April.
    3. Muriel Dejemeppe, 2005. "A Complete Decomposition of Unemployment Dynamics using Longitudinal Grouped Duration Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(1), pages 47-70, February.
    4. Carl Singleton, 2018. "Long‐Term Unemployment and the Great Recession: Evidence from UK Stocks and Flows," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(2), pages 105-126, May.
    5. Michal Franta, 2008. "Time Aggregation Bias in Discrete Time Models of Aggregate Duration Data," Working Papers 2008/10, Czech National Bank.
    6. Simon Burgess & H Turon, 2000. "Unemployment Dynamics, Duration and Equilibrium: Evidence from Britain," CEP Discussion Papers dp0474, Centre for Economic Performance, LSE.
    7. Güell, Maia & Lafuente, Cristina, 2019. "Unemployment Duration Variance Decomposition a la ABS: Evidence from Spain," CEPR Discussion Papers 13610, C.E.P.R. Discussion Papers.
    8. Adriaan S. Kalwij, 2004. "Unemployment Experiences of Young Men: on the Road to Stable Employment?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(2), pages 205-237, May.
    9. Jouko Verho, 2014. "Unemployment duration and the role of compositional variation: evidence from a period of economic crisis in Finland," Empirical Economics, Springer, vol. 47(1), pages 35-56, August.

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