A Complete Decomposition of Unemployment Dynamics Using Longitudinal Grouped Duration Data

24 Pages Posted: 11 Jan 2005

See all articles by Muriel Dejemeppe

Muriel Dejemeppe

Catholic University of Louvain - School of Economic and Social Research

Abstract

In this paper, we study the unemployment dynamics in the Belgian regions, Flanders and Wallonia, on the basis of aggregate stratified data covering the period 1973-93. We decompose the aggregate exit probability from unemployment into calendar time and, both observed and unobserved, compositional effects. We find that changes in the inflow composition affect the cyclical fluctuations in unemployment duration only marginally. However, the long-run improvement in the quality of entrants into unemployment, notably in terms of educational attainment, mitigates the strong upward trend in this duration. This is a new result as none of the existing studies purges the trend in the aggregate outflow rate of the variation in its composition. We also conclude that in Belgium, incidence explains as much as 45% of the evolution of unemployment. Finally, the diverging evolution of unemployment across Flanders and Wallonia predominantly results from a stronger decline in the exit rates from unemployment in Wallonia.

Suggested Citation

Dejemeppe, Muriel, A Complete Decomposition of Unemployment Dynamics Using Longitudinal Grouped Duration Data. Oxford Bulletin of Economics & Statistics, Vol. 67, No. 1, pp. 47-70, February 2005. Available at SSRN: https://ssrn.com/abstract=647032

Muriel Dejemeppe (Contact Author)

Catholic University of Louvain - School of Economic and Social Research ( email )

3, Place Montesquieu
1348 Louvain-la-Neuve
Belgium
+32 10 47 41 00 (Phone)
+32 10 47 39 45 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
11
Abstract Views
801
PlumX Metrics