TY - JOUR
T1 - Revisiting the determinants of unemployment duration
T2 - Variance decomposition à la ABS in Spain
AU - Guell, Maia
AU - Lafuente Martinez, Cristina
N1 - Funding Information:
☆ This paper is based on material presented by Güell in the Frisch-Tinbergen Lecture at 33th the European Association of Labour Economists Conference in September 2021 in Padova. EALE participants and Michéle Belot provided useful feedback. We are also very grateful to Katarína Borovičková, Carlos Carrillo-Tudela, Mike Elsby, Nacho García-Pérez, Rafael Lopes de Melo, John Moore, Laura Pilossoph, José V. Rodríguez Mora, Rob Shimer, Hélène Turon, and Ludo Visschers for many useful conversations and suggestions. We have also benefited from useful comments from seminar participants at the University of Edinburgh, Universidad Pablo de Olavide, CERGE-EI, Bristol University, CUNEF, EIEF, OIGI-Federal Reserve Bank of Minneapolis, NYUAB, Carlos III Madrid, Tinbergen Institute, Bank of Spain and Goethe University Frankfurt. We also thank the editor, Monica Costa-Dias, as well as two referees for their comments. We are grateful to Joan Gieseke for editorial assistance. This research has been supported by the UK Economic and Social Research Council MacCaLM Grant (ES/L009633/1).
Funding Information:
This paper is based on material presented by Güell in the Frisch-Tinbergen Lecture at 33th the European Association of Labour Economists Conference in September 2021 in Padova. EALE participants and Michéle Belot provided useful feedback. We are also very grateful to Katarína Borovičková, Carlos Carrillo-Tudela, Mike Elsby, Nacho García-Pérez, Rafael Lopes de Melo, John Moore, Laura Pilossoph, José V. Rodríguez Mora, Rob Shimer, Hélène Turon, and Ludo Visschers for many useful conversations and suggestions. We have also benefited from useful comments from seminar participants at the University of Edinburgh, Universidad Pablo de Olavide, CERGE-EI, Bristol University, CUNEF, EIEF, OIGI-Federal Reserve Bank of Minneapolis, NYUAB, Carlos III Madrid, Tinbergen Institute, Bank of Spain and Goethe University Frankfurt. We also thank the editor, Monica Costa-Dias, as well as two referees for their comments. We are grateful to Joan Gieseke for editorial assistance. This research has been supported by the UK Economic and Social Research Council MacCaLM Grant (ES/L009633/1).
Publisher Copyright:
© 2022 The Authors
PY - 2022/10
Y1 - 2022/10
N2 - Using the methodology developed in Alvarez, Borovickova, and Shimer (2014), we decompose the variance of unemployment duration in Spain into three main components: labour market frictions, duration dependence and heterogeneity. Crucial to our analysis are the comparisons by different demographic groups over the business cycle to shed light in the mechanisms behind duration dependence. We offer a general approach for interpreting administrative data that is closer to unemployment than non-employment and includes different types of unemployment spells, particularly short spells without the right to claim benefits. Labour market frictions account for the bulk of the variance of unemployment duration, and become more prominent during recessions. Duration dependence constitutes 25% of the total variance, followed by heterogeneity, which represents 18%. Women and college graduates have larger shares of duration dependence. Finally, the share of duration dependence does not vary over the business cycle for non-college workers. But it is higher during expansions for college workers, which is consistent with a statistical discrimination mechanism due to dynamic sample selection.
AB - Using the methodology developed in Alvarez, Borovickova, and Shimer (2014), we decompose the variance of unemployment duration in Spain into three main components: labour market frictions, duration dependence and heterogeneity. Crucial to our analysis are the comparisons by different demographic groups over the business cycle to shed light in the mechanisms behind duration dependence. We offer a general approach for interpreting administrative data that is closer to unemployment than non-employment and includes different types of unemployment spells, particularly short spells without the right to claim benefits. Labour market frictions account for the bulk of the variance of unemployment duration, and become more prominent during recessions. Duration dependence constitutes 25% of the total variance, followed by heterogeneity, which represents 18%. Women and college graduates have larger shares of duration dependence. Finally, the share of duration dependence does not vary over the business cycle for non-college workers. But it is higher during expansions for college workers, which is consistent with a statistical discrimination mechanism due to dynamic sample selection.
KW - unemployment duration
KW - administrative social security data
KW - duration dependence
U2 - 10.1016/j.labeco.2022.102233
DO - 10.1016/j.labeco.2022.102233
M3 - Article
SN - 0927-5371
VL - 78
JO - Labour Economics
JF - Labour Economics
ER -