Market structure and spells of employment and unemployment: Evidence from the construction sector in Egypt

This paper investigates the links between market structure and spells of employment and unemployment in the construction sector in Egypt using an augmented job search framework. Two key features of the model are the reservation frontier which allows for a trade-off between wages and expected duration of employment, and the dependency of unemployment durations on expected employment durations and expected wages. These, as well as conjectures concerning the influence of demand-side forces obtained from the expressions for the transition rates out of employment and unemployment, are examined using Weibull, log-logistic and generalized gamma parameterizations of the hazard rate. The parametric assumptions are exploited to resolve problems associated with selectivity and use of generated regressors.     

Unemployment Duration: An Analysis of Incomplete,Completed, and Multiple Spells in Emilia-Romagna

Sets of incomplete and completed spells of unemployment wereobtained from the Italian Quarterly Labour Force Survey,carried out by ISTAT in Emilia-Romagna (1993:1–1995:1).The data were analysed through a proportional hazards modelwith a Weibull specification of the baseline hazard, includingboth unobserved heterogeneity applied to the scale parameterof the duration distribution, and telescoping effect to accountfor spikes in the distribution of unemployment spells.They were compared formally also with a non-proportional hazardmodel based on a log-logistic distribution of duration.The estimation of the parameters was carried out separately on bothcompleted spells and quarterly incomplete spells to ascertaindifferences and to envisage the potential seasonal effect.The results showed that the shape parameters changed over time.The parameters of each covariate proved to be statisticallystable over time and were also equal to the parameters ofthe completed spells model.Therefore, the analysis of incomplete spells is fairly feasiblewhen an even (closed form) baseline hazard function is suitablefor data.     

Potential Unemployment Benefit Duration and Spell Length: Lessons from a Quasi-Experiment in Austria

The paper studies the effect of potential unemployment benefit duration on the length of unemployment spells in Austria. It takes advantage of a quasi-experimental situation, where potential benefit duration was extended in 1988 for elderly workers living in specific regions of the country. The empirical analysis shows that men react significantly to benefit duration whereas women generally do not. The quantitative impact is smaller than in comparable studies for the US and Germany. Furthermore, the impact of extended benefit duration is differentiated for short and long spells. Whereas for long spells higher impacts for men as well as for women are found, no unemployment-prolonging effects for short spells could be detected.     

Distribution and determinants of lifetime unemployment

The empirical literature on unemployment almost exclusively focuses on the duration of distinct unemployment spells. In contrast, we use a unique administrative micro data set for the time span 1975-2004 to investigate individual lifetime unemployment — defined as the cumulative length of all unemployment spells over a 25-year period. This new perspective enables us to answer questions regarding the long-term distribution and determinants of unemployment for birth cohorts 1950-1954. We show that lifetime unemployment is highly concentrated on a small part of the population. With censored quantile regressions we investigate the long-lasting influence of bad luck early in the professional career: Controlling for individual and firm characteristics we find that choosing at a young age what turns out to be an unfavorable occupation significantly increases the predicted amount of lifetime unemployment.     

Unemployment insurance and the distribution of unemployment spells

In this paper administrative data from the unemployment-insurance (UI) system are used to examine the distribution of unemployment spells. Hazard plots of the data reveal a strong clustering around the benefit exhaustion point. In addition, estimation of the effects of the exhaustion point and of the UI benefit level on spell lengths obtained with a non-parametric proportional-hazards model - estimated by direct maximization of the general likelihood function - shows significant effects of both. However, the effect of the exhaustion point on the hazard is not proportional, making detection of its effect somewhat difficult.     

Durations in Panel Data Subject to Attrition: A Note on Estimation in the Case of a Stock Sample1

In the empirical analysis of unemployment durations or job durations, it is generally assumed that the stochastic processes underlying labour market behaviour and the behaviour concerning participation in a panel survey are independent. As a consequence, spells that are incomplete due to attrition can be treated as spells that are subjected to independent right censoring. However, if the assumption of independence is violated, i.e. if for example the probability of dropping out of the panel is related to the rate at which a job is found, then attrition may have to be modelled and estimated jointly with the unemployment duration distribution to avoid biased estimates of the rate at which individuals become employed. A way to model the joint dependence is by means of stochastically related unobserved determinants. We discuss some properties of these kinds of models and state conditions needed to estimate such models in the case of stock sampled duration data.     

Spell durations with long unemployment insurance periods

This paper uses data from a natural experiment to investigate the potential incentive effect of a fixed unemployment insurance period. We compare two large groups of Norwegian unemployed persons who registered as unemployed in 1990 and 1991. The last group was affected by a rule change that in practice extended the length of unemployment benefits to more than 3 years. Our data are taken from official records, and we construct unemployment durations by combining information from the unemployment registers with employers' records. We use a proportional hazard model with a flexible baseline. The results suggest that the main effect of benefits running out is to make people drop out of the unemployment register. We find neither clear evidence that the hazard into employment increased when the end of benefits approached in the pre-liberalisation group, nor that behaviour in this part of the spells changed after the reform. On the other hand, our results suggest that the reform had an all over negative effect on the employment hazard.     

Incidence and duration of unemployment spells: Implications for the male–female wage differentials

We demonstrate in this paper that the incidence of unemployment and duration of unemployment spells affect the male–female gender wage differential. The results indicate that after controlling for sample selectivity bias in the wage equation, the incidence of unemployment and duration of unemployment spells account for about 14.2% and 39.6%, respectively, of the wage differential that exists between males and females. We observed that while the duration of unemployment accounts for a substantial portion of the wage differential in both the service (48.8%) and the manufacturing (17.0%) sectors, the impacts of the incidence of unemployment and duration of unemployment spells variables on the wage differential are rather small in the service (0.07%) and the manufacturing (1.6%) sectors. Also, high incidence of unemployments is associated with low wages for males and females in all samples. In contrast, longer durations of unemployment spells tend to increase males’ wages and decrease females’ wages in the full and service sector samples. At the macro level, the results seem to suggest that promotion of gender wage equality should be associated with policies that will minimize the female's incidence of unemployment and duration of unemployment spells.     

Estimating the probability of leaving unemployment using uncompleted spells from repeated cross-section data

We propose a new econometric estimation method for analyzing the probability of leaving unemployment using uncompleted spells from repeated cross-section data, which can be especially useful when panel data are not available. The proposed method-of-moments-based estimator has two important features: (1) it estimates the exit probability at the individual level and (2) it does not rely on the stationarity assumption of the inflow composition. We illustrate and gauge the performance of the proposed estimator using Spanish Labor Force Survey data, and analyze the changes in distribution of unemployment between the 1980s and 1990s during a period of labor market reform. We find that the relative probability of leaving unemployment for the short-term unemployed compared to the long-term unemployed becomes significantly higher in the 1990s.     

Marketplace matching in Britain: Evidence from individual unemployment spells

This paper investigates job matching patterns in Great Britain. Evidence from individual transitions out of unemployment demonstrates that recently unemployed workers are likely to find jobs in the existing stock of vacancies. If, however, they are unlucky and fail to match early on, job seekers cease matching with existing vacancies. Workers with longer unemployment spells instead form matches with the flow of new vacancies. This pattern is more pronounced for workers who experienced only short spells of employment prior to their current job search. This evidence provides robust support for stock-flow matching but is difficult to reconcile with random matching.     

Ethnic Variation in Commuting Propensity and Unemployment Spells: Some U.K. Evidence

This paper uses 1987–88 U.K. survey data from the unemployment inflow to investigate the ability of ethnic variation in commuting willingness to account for longer non-white unemployment spells. The study is motivated by the possibility that ethnic minorities are at greater risk of spatial mismatch unemployment because they are more geographically restrictive in their job-seeking activities. Our findings support this hypothesis and indicate that lower commuting willingness explains about 20% of the differential between the average unemployment spells of ethnic minorities and whites.     

Conducting inference in semiparametric duration models under inequality restrictions on the shape of the hazard implied by job search theory

Using a four-month panel of revised Current Population Survey data from September–December 1993, we extend the class of semiparametric hazard models of the type first studied by Prentice and Gloeckler ( 1978 ), and brought to the attention of economists by Meyer ( 1988 , 1990 ), to incorporate inequality restrictions on the shape of the hazard. This extension enables us to test hypotheses regarding the shape of the hazard implied by search theory using duration data alone. These tests provide another link between the empirical and theoretical literatures on unemployment duration and job search. The GHK probability simulator makes it straightforward to generate approximate hypothesis test results, as simulation estimates of the probability under the null hypothesis are generated using the asymptotic normal approximation to the distribution of the hazard parameters obtained from maximum likelihood estimation. Importance sampling is used to conduct inference under the null and obtain exact finite sample estimates of the probability the null is satisfied. A new algorithm for maintaining stability of the importance weights is also developed. Copyright © 1999 John Wiley & Sons, Ltd.     

Do the Rich Stay Unemployed Longer? An Empirical Study for the UK

This paper investigates the impact of individual asset holdings on the probability of leaving unemployment. According to the theory, higher levels of financial wealth will result in higher reservation wages and longer unemployment durations. I estimate the impact of financial assets on the hazard rate, using data for Great Britain. The empirical findings indicate that individual asset holdings affect significantly the escape rate out of unemployment. In particular, negative (positive) levels of wealth increase (reduce) the hazard of leaving unemployment. The size of the impact is, however, rather small. Increasing by 100% the level of wealth of a representative individual, with net wealth and other individual characteristics equal to the sample mean, increases the duration of the unemployment spell by half a week.     

Early Labor Market Experiences of Youth and Subsequent Wages

A bstract . High youth unemployment continues to be a major concern to policymakers in the United States. In view of the many studies that have documented a perpetuation of the relatively high jobless rates for youth in the postwar period whether disaggregated by age, sex , or race , the debate on the youth employment-unemployment problem has begun to focus more recently on its socioeconomic consequences. One of the overriding concerns is that early labor market unemployment experiences might carry over into later labor force performance. The cumulative effects of prolonged periods of unemployment and intermittent unemployment (i.e. , duration and spells of unemployment) on the subsequent wages of a cohort of young men are examined. Spells of unemployment experienced early in the labor market careers of the cohort tended to have an increasing effect on their later wages , while spells occurring later and the duration of unemployment then serve to lower their subsequent wages.     

State dependency in youth unemployment: A lost generation?

Utilizing a job search framework and survey data on both completed and uncompleted spells of unemployment we present in this paper maximum likelihood estimates of the determinants of re-employment probabilities of young workers in Britain. The model used allows us to examine the importance of state dependency in youth unemployment as well as ethnicity, educational qualifications, and unemployment income. Results suggest that there is strong evidence of negative duration dependence in the transition from unemployment to employment for young workers in Britain.     

DURATION DEPENDENCE VERSUS UNOBSERVED HETEROGENEITY IN TREATMENT EFFECTS: SWEDISH LABOR MARKET TRAINING AND THE TRANSITION RATE TO EMPLOYMENT

The effect of a treatment on the hazard rate of a duration outcome may depend on the elapsed time since treatment. In addition, treatment effects may be heterogeneous across agents. The former gives rise to duration dependence of the treatment effect, whereas unobserved heterogeneity gives rise to spurious duration dependence of the observable hazard rate. We develop a model allowing for duration dependence and unobserved heterogeneity in the treatment effect. The model incorporates a Timing of Events model and allows for selectivity on unobservables. We prove identification, exploiting variation in the timing of treatment and outcome. In the application we analyze the effects of the Swedish vocational employment training program on the individual transition rate from unemployment to work. We demonstrate the appropriateness of the approach by studying the enrollment process. The data cover the population and include multiple unemployment spells for many individuals. The results indicate a large, significantly positive effect on exit to work shortly after exiting the program. The effect at the individual level diminishes after some weeks. When taking account of the time spent in the program, the effect on the mean unemployment duration is small. Copyright © 2012 John Wiley & Sons, Ltd.     

The impact of territorially concentrated FDI on local labor markets: Evidence from the Czech Republic

This paper investigates the impact of a large and territorially concentrated foreign direct investment (FDI) inflow on local labor market outcomes in the Czech Republic. A conditional difference-in-differences technique is employed for an estimation of the impact and block bootstrapping is used for computing consistent standard errors. The results indicate a positive and statistically as well as economically significant effect of a large investment project on the local unemployment outflow rate, which is driven mainly by increases in the aggregate unemployment exit hazard rates for unemployment durations smaller than nine months. Subsequent to the investment, the unemployment rate decreased by 1.7 percentage points and the employment rate increased by 3.7 percentage points in the host district. However, the impact on long-term unemployed was negligible as the exit hazard rates for durations longer than nine months remain unchanged. Moreover, a simple cost–benefit analysis suggests that investment incentives paid from a state budget would pay off only in a horizon of twelve years.     

Immigrant wage profiles within and between establishments

Life cycle wages of immigrants from developing countries fall short of catching up with wages of natives. Using linked employer–employee data, we show that 40% of the native–immigrant wage gap is explained by differential sorting across establishments. We find that returns to experience and seniority are similar for immigrant and native workers, but that differences in job mobility and intermittent spells of unemployment are major sources of disparity in lifetime wage growth. The inferior wage growth of immigrants primarily results from failure to advance to higher paying establishments over time. These empirical patterns are consistent with signaling disadvantages of immigrant job seekers, but not with the explanation that low wage growth follows from inferior information about employers and job opportunities.     

Benefit shifting: The case of sickness insurance for the unemployed

This study describes the probability of transition from unemployment with unemployment insurance (UI) to sickness insurance (SI), using a proportional hazard duration model and a large register-based dataset. The combination of limited UI duration and the fact that SI rights do not depend on remaining UI, creates an incentive to use SI to effectively extend UI. The separate effects of elapsed unemployment duration and of UI duration on hazard rates are identified through a reform of the UI system. The estimated hazard rate for transition from unemployment to SI increases sharply the last months before UI exhaustion. The spikes are larger for diagnosis for mental illness, and vary across individuals, but are present for all groups and all diagnoses.     

When do they leave? The dynamics of living in low-income neighbourhoods

We use longitudinal tax data to explore several undocumented aspects of residential spells in low-income neighbourhoods. Although new spells generally last much longer than spells in the low-income state, both types of spells exhibit negative duration dependence. While factors such as family type, age, and local unemployment rates play a considerable role in the length of both types of spells, the magnitude of these roles is quite different. These differences suggest that in contrast to the low-income state, the dynamics of low-income neighbourhood spells are largely shaped by non-economic factors.