The Anatomy of Unemployment Dynamics

Abbring, Jaap H.; van den Berg, Gerard J.; van Ours, Jan C.

doi:10.2139/ssrn.167308

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The Anatomy of Unemployment Dynamics

Tinbergen Institute Working Paper No. 94-95 (revised)

43 Pages Posted: 1 Aug 1999

See all articles by Jaap H. Abbring

Jaap H. Abbring

Tilburg University - Department of Econometrics & Operations Research; Tilburg University - Center for Economic Research (CentER); Tinbergen Institute; IZA Institute of Labor Economics

Gerard J. van den Berg

University of Groningen; VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

Jan C. van Ours

Tilburg University - Department of Economics; University of Melbourne - Department of Economics

Date Written: May 7, 1999

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 contemporaneous calendar time effects acting on the exit probabilities for all currently unemployed. Also, we allow for cohort effects on the exit probabilities by allowing the composition of the inflow into unemployment to depend on calendar time. In both cases we distinguish between business cycle effects and seasonal effects. The model is estimated with aggregate unemployment duration data, in which we allow for unobserved heterogeneity and correlated measurement errors. The results enable us to give a complete decomposition of the dynamics of unemployment over calendar time.

JEL Classification: C41, E32, J64

Suggested Citation: Suggested Citation

Abbring, Jaap H. and van den Berg, Gerard J. and van Ours, Jan C., The Anatomy of Unemployment Dynamics (May 7, 1999). Tinbergen Institute Working Paper No. 94-95 (revised), Available at SSRN: https://ssrn.com/abstract=167308 or http://dx.doi.org/10.2139/ssrn.167308