Why did the average duration of unemployment become so much longer? |
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Authors: | Toshihiko Mukoyama Ay?egül ?ahin |
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Institution: | a Department of Economics, University of Virginia, P.O. Box 400182, Charlottesville, VA 22904-4182, USA b CIREQ, Canada c Federal Reserve Bank of New York, USA |
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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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Keywords: | E24 J64 |
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