IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa03p496.html
   My bibliography  Save this paper

The Impact of Demographic and Individual Heterogeneity on Unemployment Duration: A Regional Study

Author

Listed:
  • William Collier

Abstract

Since 1992, claimant unemployment has fallen by almost 1½ million and on the ILO definition by nearly 1 million. Despite this fall, changes to the headline rate of unemployment masks a far more complex pattern of the UK?s unemployment experience. For many individuals unemployment is a short-lived affair. For others, the risk of repeated or prolonged periods of unemployment is high. Repeated or prolonged unemployment spells may reflect occupational choice or poor employability brought about by poor skills and/or repeated labour market exclusion. They may also reflect a lack of employment opportunities concentrated in specific geographical areas. Both facets amount to a significant detachment from work. They also contribute to recent growth in the level of non-working households and low pay. The differential risk of unemployment across UK regions and population sub-groups is well recognised. However, the extent to which residential location and individual heterogeneity contribute to the duration of unemployment is more difficult to discern. This paper investigates the impact of individual heterogeneity and regional influences on unemployment duration utilising cross-section microeconomic data drawn from a representative random survey of individual job seekers for the English County of Kent. These individual-level data are unique in that they provide information concerning the personal characteristics of job seekers, alongside direct observations of both their reservation wages and job search behaviour. The availability of such data is rare. To our knowledge, there is no existing study utilising such data at the regional level. This paper contributes to the empirical literature by analysing the extent to which individual heterogeneity and intra-regional variation in labour market opportunities impact upon the observed distribution of unemployment duration(s). In particular, the paper analyses the extent to which the duration of unemployment is determined by individual choice. This is an important issue for the formation and evaluation of policy. If individual choice is found to significantly influence the duration of unemployment then the efficacy of current microeconomic supply?side initiatives such as ?The New Deal? and other welfare to work policies is supported. The existence of regional influences, by contrast, advocates a more active role for macroeconomic demand-led management. It also supports a more integrated strategy for the implementation of urban and regional policy such as the recent creation of Frameworks for Regional Employment and Skills Action (FRESAs). Utilising an econometric model tied closely to job search theory, our results reveal that individual characteristics and related ?choice? variables? such as educational attainment, labour market mobility and job search behaviour exercise important impacts on the duration of unemployment. However, after controlling for such factors, there remain significant geographical variations. These results are robust for both males and females. Thus, the results provide new insights into the benefits of current policies aimed at increasing the employability of the unemployed.

Suggested Citation

  • William Collier, 2003. "The Impact of Demographic and Individual Heterogeneity on Unemployment Duration: A Regional Study," ERSA conference papers ersa03p496, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa03p496
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa03/cdrom/papers/496.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Holzer, Harry J, 1988. "Search Method Use by Unemployed Youth," Journal of Labor Economics, University of Chicago Press, vol. 6(1), pages 1-20, January.
    2. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366.
    3. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    4. Blanden, Jo & Goodman, Alissa & Gregg, Paul & Machin, Stephen, 2002. "Changes in intergenerational mobility in Britain," LSE Research Online Documents on Economics 19507, London School of Economics and Political Science, LSE Library.
    5. Blackaby, D H & Manning, D N, 1990. "The North-South Divide: Questions of Existence and Stability?," Economic Journal, Royal Economic Society, vol. 100(401), pages 510-527, June.
    6. Lancaster, Tony, 1985. "Simultaneous equations models in applied search theory," Journal of Econometrics, Elsevier, vol. 28(1), pages 113-126, April.
    7. Han, Aaron & Hausman, Jerry A, 1990. "Flexible Parametric Estimation of Duration and Competing Risk Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(1), pages 1-28, January-M.
    8. Atkinson, A. B. & Gomulka, J. & Micklewright, J. & Rau, N., 1984. "Unemployment benefit, duration and incentives in Britain : How robust is the evidence?," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 3-26.
    9. Dolton, Peter & O'Neill, Donal, 1996. "Unemployment Duration and the Restart Effect: Some Experimental Evidence," Economic Journal, Royal Economic Society, vol. 106(435), pages 387-400, March.
    10. Sarah Brown & John Sessions, 1997. "A Profile of UK Unemployment: Regional versus Demographic Influences," Regional Studies, Taylor & Francis Journals, vol. 31(4), pages 351-366.
    11. Blackaby, D H & Manning, D N, 1992. "Regional Earnings and Unemployment--A Simultaneous Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(4), pages 481-501, November.
    12. Disney, Richard & Webb, Steven, 1991. "Why Are There So Many Long Term Sick in Britain?," Economic Journal, Royal Economic Society, vol. 101(405), pages 252-262, March.
    13. Jackman, R & Layard, Richard & Pissarides, C, 1989. "On Vacancies," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(4), pages 377-394, November.
    14. Arulampalam, Wiji & Stewart, Mark B, 1995. "The Determinants of Individual Unemployment Durations in an Era of High Unemployment," Economic Journal, Royal Economic Society, vol. 105(429), pages 321-332, March.
    15. Gorter, Dirk & Gorter, Cees, 1993. "The Relation between Unemployment Benefits, the Reservation Wage and Search Duration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(2), pages 199-214, May.
    16. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ana Gorenca & Theodhor Kuro, 2018. "The Sensitivity of the Effect of on-the-Job Training on Employment Outcomes in Experimental and Non-Experimental Settings," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 14(5), pages 141-153, OCTOBER.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Knut Roed & Tao Zhang, 2003. "Does Unemployment Compensation Affect Unemployment Duration?," Economic Journal, Royal Economic Society, vol. 113(484), pages 190-206, January.
    2. Aysit Tansel & H. Mehmet Taşçı, 2010. "Hazard Analysis of Unemployment Duration by Gender in a Developing Country: The Case of Turkey," LABOUR, CEIS, vol. 24(4), pages 501-530, December.
    3. Gerard J. van den Berg & Bas van der Klaauw & Jan C. van Ours, 2004. "Punitive Sanctions and the Transition Rate from Welfare to Work," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 211-241, January.
    4. Pieter Serneels, 2004. "The Nature of Unemployment in Urban Ethiopia," CSAE Working Paper Series 2004-01, Centre for the Study of African Economies, University of Oxford.
    5. 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.
    6. Marit Hinnosaar, 2003. "Reservation wages in Estonia," Bank of Estonia Working Papers 2003-1, Bank of Estonia, revised 11 Oct 2003.
    7. Boheim, Rene & Taylor, Mark P., 2002. "The search for success: do the unemployed find stable employment?," Labour Economics, Elsevier, vol. 9(6), pages 717-735, December.
    8. Aico Van Vuuren & Gerard J. Van Den Berg & Geert Ridder, 2000. "Measuring the equilibrium effects of unemployment benefits dispersion," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(6), pages 547-574.
    9. Kupets, Olga, 2006. "Determinants of unemployment duration in Ukraine," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 228-247, June.
    10. Aedin Doris & Donal O'Neill & Olive Sweetman, 2017. "Does Reducing Unemployment Benefits during a Recession Reduce Youth Unemployment? Evidence from a 50% cut in Unemployment Assistance," Economics Department Working Paper Series n279-17.pdf, Department of Economics, National University of Ireland - Maynooth.
    11. Carling, Kenneth & Holmlund, Bertil & Vejsiu, Altin, 2001. "Do Benefit Cuts Boost Job Finding? Swedish Evidence from the 1990s," Economic Journal, Royal Economic Society, vol. 111(474), pages 766-790, October.
    12. Stephen P. Jenkins & Carlos García-Serrano, 2000. "Re-employment Probabilities for Spanish Men: What Role Does the Unemployment Benefit System Play?," Discussion Papers of DIW Berlin 216, DIW Berlin, German Institute for Economic Research.
    13. Taylor, Mark P & Böheim, René, 2000. "Unemployment Duration and Exit States in Britain," CEPR Discussion Papers 2500, C.E.P.R. Discussion Papers.
    14. George Neumann, 1996. "Search Models and Duration Data," Econometrics 9602008, University Library of Munich, Germany, revised 07 Mar 1996.
    15. Bill Collier, 2000. "The UK Wage Curve: New Evidence from the British Household Panel Survey," Studies in Economics 0010, School of Economics, University of Kent.
    16. Gregg, Paul & Petrongolo, Barbara, 2005. "Stock-flow matching and the performance of the labor market," European Economic Review, Elsevier, vol. 49(8), pages 1987-2011, November.
    17. 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.
    18. repec:eee:labchp:v:3:y:1999:i:pc:p:3085-3139 is not listed on IDEAS
    19. Roed, Knut & Zhang, Tao, 2005. "Unemployment duration and economic incentives--a quasi random-assignment approach," European Economic Review, Elsevier, vol. 49(7), pages 1799-1825, October.
    20. William Collier, 2005. "Unemployment duration and individual heterogeneity: a regional study," Applied Economics, Taylor & Francis Journals, vol. 37(2), pages 133-153.

    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa03p496. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.