Does unemployment cause unemployment? Micro evidence from Norway

Abstract

The way that unemployment duration affects employment prospects, is investigated using Norwegian micro transition data encompassing detailed accounts of 14 807 unemployed adults. A generalized non-proportional Weibull model is estimated, with two possible exits from the unemployment pool: a job or a labour force exit. On average the probability of obtaining a job is fairly constant at the individual level, while the probability of exiting the labour force increases significantly as unemployment duration is prolonged. For some particular groups of unemployed, there is also a marked negative duration dependence in the probability of obtaining a job.