Persistencies in the Labour Market

Paul Frijters (), Maarten Lindeboom () and Gerard J. van den Berg
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Maarten Lindeboom: VU University Amsterdam

No 4025, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: Using longitudinal income-tax registers, we study how past labour market outcomes affect current labour market transition rates. We focus on hysteresis effects of the durations and incidence of previous spells out of work. We estimate flexible multi-state Mixed Proportional Hazard specifications for transition rates between employment, unemployment, and welfare/non-participation. Our main finding is that after longer periods of employment with high income, individuals' transition rates from unemployment to employment increase. Longer periods of non-employment generally decrease future transition rates to work, and sometimes also from work. The quantitative magnitude of persistency and hysteresis effects on inequality is modest.

Keywords: duration analysis; hysteresis; inequality; wages; unemployment; hazard rates; employment; income; work (search for similar items in EconPapers)
JEL-codes: J64 J22 C41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2009-02
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Related works:
Working Paper: Persistencies in the labour market (2000)
Working Paper: Persistencies in the Labor Market (2000)
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