Working Paper: CEPR ID: DP3957
Authors: Maia Gell; Luo Jia Hu
Abstract: We propose a new econometric estimation method for analysing the probability of leaving un-employment using uncompleted spells from repeated cross-section data, which can be especially useful when panel data are not available. The proposed method-of-moments-based estimator has two important features: (1) it estimates the exit probability at the individual level and (2) it does not rely on the stationarity assumption of the inflow composition. We illustrate and gauge the performance of the proposed estimator using the Spanish Labor Force Survey data, and analyse the changes in distribution of unemployment between the 1980s and 1990s during a period of labour market reform. We find that the relative probability of leaving unemployment of the short-term unemployed versus the long-term unemployed becomes significantly higher in the 1990s.
Keywords: duration analysis; GMM; repeated cross-section data; unemployment
JEL Codes: C41; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| introduction of fixed-term contracts in Spain (J63) | increased relative probability of leaving unemployment (J69) |
| increased relative probability of leaving unemployment (J69) | increased outflow rates from unemployment (J68) |
| short-term unemployed individuals (J65) | increased exit probability relative to long-term unemployed individuals (J68) |
| negative duration dependence (C41) | less likely to exit unemployment for long-term unemployed (J64) |