U.S. Unemployment Duration: Has Long Become Longer or Short Become Shorter?

34 Pages Posted: 24 Jul 2006

See all articles by José A. F. Machado

José A. F. Machado

New University of Lisbon

Pedro Portugal

Bank of Portugal - Research Department; New University of Lisbon; IZA Institute of Labor Economics

Juliana Guimaraes

Universidade Federal de Pernambuco (UFPE)

Date Written: June 2006

Abstract

The U.S. labor market has been experiencing unprecedented high average unemployment duration. The shift in the unemployment duration distribution can be traced back to the early nineties. In this study, censored quantile regression methods are employed to analyze the changes in the US unemployment duration distribution. We explore the decomposition method proposed by Machado and Mata (2005) to disentangle the contribution of the changes generated by the covariate distribution and by the conditional distribution. The data used in this inquiry are taken from the nationally representative Displaced Worker Surveys of 1988 and 1998. We provide evidence that the change in the unemployment duration distribution is mainly produced by the opposing effects of a sharp rise in job-to-job transition rates and an increased sensitivity of unemployment duration to unemployment rates. Compositional changes in the labor force played a limited role. We rationalize our findings by arguing that improved screening technology is likely to be the relevant underlying mechanism at work.

Keywords: quantile regression, duration analysis, unemployment duration, counterfactual

JEL Classification: C14, C21, C41, J64

Suggested Citation

Machado, José A. F. and Portugal, Pedro and Guimaraes, Juliana, U.S. Unemployment Duration: Has Long Become Longer or Short Become Shorter? (June 2006). IZA Discussion Paper No. 2174, Available at SSRN: https://ssrn.com/abstract=918716

José A. F. Machado (Contact Author)

New University of Lisbon

Lisbon, 1099-085
Portugal

Pedro Portugal

Bank of Portugal - Research Department ( email )

Av. Almirante Reis 71, 6th
Lisbon 1150-012
Portugal
+351 21 313 0000 (Phone)
+351 21 814 3841 (Fax)

New University of Lisbon

Lisbon, 1099-085
Portugal

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Juliana Guimaraes

Universidade Federal de Pernambuco (UFPE) ( email )

Cidade Universitária
Cidade Universitária, Pernambuco 50670-901
Brazil

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
84
Abstract Views
1,201
rank
355,256
PlumX Metrics