Censored Quantile Regressions and the Length of Unemployment Periods in West Germany

33 Pages Posted: 3 Sep 2004 Last revised: 14 Aug 2008

See all articles by Elke Lüdemann

Elke Lüdemann

ifo Institute for Economic Research - Department Human Capital and Innovation

Ralf A. Wilke

Copenhagen Business School - Department of Economics; Center for European Economic Research (ZEW)

Xuan Zhang

ZEW – Leibniz Centre for European Economic Research

Date Written: April 2005

Abstract

In this paper, we estimate the effect of different macro and micro variables on the distribution of unemployment duration in West Germany using censored quantile regressions. We analyze unemployment periods of more than 91,000 observations from the years 1981 to 1997 drawn from the IAB employment subsample. The latter is an administrative data set that is representative with respect to the socially insured workforce. Surprisingly, we find that the educational degree and variables indicating the macroeconomic environment such as the unemployment rate have a weak effect only. On the other hand, variables reflecting the (un-)employment history of an individual such as the length of tenure, recall to the same employer in the past, recent unemployment and the position in the population income distribution before unemployment have the strongest effects on unemployment duration. We conclude that work history variables are the ones most suitable in characterizing the unemployment duration of an individual. From a methodological point of view, it is interesting that some regression coefficients have a different sign depending on the quantiles of the unemployment duration distribution. This clearly is a violation of the classical proportional hazard assumption which is very common in unemployment duration analysis.

Keywords: Censored quantile regression, unemployment duration, administrative data

JEL Classification: C24, J64

Suggested Citation

Lüdemann, Elke and Wilke, Ralf A. and Zhang, Xuan, Censored Quantile Regressions and the Length of Unemployment Periods in West Germany (April 2005). ZEW - Centre for European Economic Research Discussion Paper No. 04-057, Available at SSRN: https://ssrn.com/abstract=585604 or http://dx.doi.org/10.2139/ssrn.585604

Elke Lüdemann

ifo Institute for Economic Research - Department Human Capital and Innovation ( email )

Poschingerstr. 5
Munich, 81679
Germany
++49 89 9224 1369 (Phone)

HOME PAGE: http://www.ifo.de/luedemann-e

Ralf A. Wilke (Contact Author)

Copenhagen Business School - Department of Economics ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Xuan Zhang

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

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