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The Anatomy of Unemployment Dynamics

Author

Listed:
  • Abbring, J.H.

    (Tilburg University, School of Economics and Management)

  • van den Berg, G.
  • van Ours, J.C.

    (Tilburg University, School of Economics and Management)

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.
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Suggested Citation

  • Abbring, J.H. & van den Berg, G. & van Ours, J.C., 1999. "The Anatomy of Unemployment Dynamics," Other publications TiSEM 96f7e625-31d6-41c1-8e5d-e, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:96f7e625-31d6-41c1-8e5d-e664ee481ed6
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    References listed on IDEAS

    as
    1. Van den Berg, G J & Lindeboom, M & Ridder, G, 1994. "Attrition in Longitudinal Panel Data and the Empirical Analysis of Dynamic Labour Market Behaviour," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(4), pages 421-435, Oct.-Dec..
    2. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    3. Dynarski, Mark & Sheffrin, Steven M, 1990. "The Behavior of Unemployment Durations over the Cycle," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 350-356, May.
    4. repec:bla:econom:v:58:y:1991:i:229:p:93-106 is not listed on IDEAS
    5. Abbring, Jaap H & van den Berg, Gerard J & van Ours, Jan C, 2001. "Business Cycles and Compositional Variation in U.S. Unemployment," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(4), pages 436-448, October.
    6. Gerard J. van den Berg, 1990. "Nonstationarity in Job Search Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(2), pages 255-277.
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    More about this item

    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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