The Determinants of Individual Unemployment Durations in an Era of High Unemployment

Abstract

This paper presents the results of an econometric analysis of the conditional probability of leaving unemployment for two male inflow cohorts entering unemployment at very different points in time: 1978 and 1987. The effect of income while unemployed is found to be much weaker for the 1987 cohort, an elasticity of -0.1 compared with -0.4, and is only found to be significant for teenagers and in the first three months of a spell. Demand constraints, measured by the local unemployment rate, are found to have a stronger negative effect on the exit probability for the 1987 cohort than in 1978.