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Wages, work, and unemployment

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  • Andrew Hildreth
  • Stephen Millard
  • Dale Mortensen
  • Mark Taylor

Abstract

This paper provides new evidence on unemployment durations for individuals in Great Britain using a three state Markov framework in a competing risk setting and a nationally representative data set. The analysis is based on the premise that an individual's movements between labour market states can be represented by a Markov process. The modelling procedure combines the dynamic properties of the search approach to unemployment while using the labour supply decision at each moment in time in response to the expected wage to include participation decisions. Using this framework, we are able to determine the effect of individual characteristics, including the expected wage, on labour market behaviour. The model is estimated separately for men and women, and for young and mature workers, to investigate whether labour market behaviour differs for these groups. The validity of the Markov assumptions are tested using different model specifications, and changes in the model over calendar time are also presented.

Suggested Citation

  • Andrew Hildreth & Stephen Millard & Dale Mortensen & Mark Taylor, 1998. "Wages, work, and unemployment," Applied Economics, Taylor & Francis Journals, vol. 30(11), pages 1531-1547.
    • Handle: RePEc:taf:applec:v:30:y:1998:i:11:p:1531-1547
    DOI: 10.1080/000368498324869
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    References listed on IDEAS

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    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    2. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366.
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    Cited by:

    1. Wasmer, E., 1998. "Labour Supply Dynamics, Unemployment and Human Capital Investments," Papers 651, Stockholm - International Economic Studies.
    2. Bradley, Steve & Crouchley, Rob & Oskrochi, Reza, 2003. "Social exclusion and labour market transitions: a multi-state multi-spell analysis using the BHPS," Labour Economics, Elsevier, vol. 10(6), pages 659-679, December.
    3. Taylor, Mark P & Böheim, René, 2000. "Unemployment Duration and Exit States in Britain," CEPR Discussion Papers 2500, C.E.P.R. Discussion Papers.
    4. Ollikainen, Virve, 2003. "The Determinants of Unemployment Duration by Gender in Finland," Discussion Papers 316, VATT Institute for Economic Research.
    5. Fernando Muñoz-Bullón & Miguel A. Malo, 2003. "Employment status mobility from a life-cycle perspective," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 9(7), pages 119-162.
    6. Sinko, Pekka & Holm, Pasi & Tossavainen, Pekka, 1999. "Labour Market Policy and Unemployment - A Job Flow Model of Finland," Discussion Papers 210, VATT Institute for Economic Research.
    7. Fenglian Du & Jian-chun Yang & Xiao-yuan Dong, 2007. "Why Do Women Have Longer Unemployment Durations than Men in Post-Restructuring Urban China?," Working Papers PMMA 2007-23, PEP-PMMA.

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