Article2000

Unemployment persistence

332 citations0/0 files storedOxford Economic Papers

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Labor market dynamics and wage inequality Education and Labor Relations Unemployment and Economic Growth

Abstract

We estimate dynamic panel data models of unemployment incidence for men using the British Household Panel Survey. Econometric issues concerning unobserved individual heterogeneity, genuine state dependence, and the initial conditions problems are addressed in detail. We find strong evidence of state dependence consistent with the scarring theory of unemployment - an individual's previous unemployment experience has implications for his future labour market experience. This suggests that policies reducing short run employment incidence will have longer-run effects by reducing the equilibrium or natural rate of unemployment.

Citations in this library

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References

1981Heterogeneity and State Dependence 1992Loss of Skill During Unemployment and the Persistence of Employment Shocks 2000Panel Data Discrete Choice Models with Lagged Dependent Variables

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