Recurrent unemployment, welfare benefits and heterogeneity

Jose Arranz () and Juan Muro ()

International Review of Applied Economics, 2004, vol. 18, issue 4, 423-441

Abstract: The objective of this paper is to investigate the causes of the recurrences of individuals in unemployment during benefit periods. So as to attain this objective, we use administrative data from the Spanish Employment Agency to estimate a duration model with multiple spells that allows for unemployment state dependence through lagged unemployment duration in order to distinguish the heterogeneity and scarring effects. We find that an increase in the duration of previous unemployment benefit periods lengthens the expected duration of future unemployment benefit periods. True state dependence and heterogeneity, intensity of job search and local labour market conditions are among the elements that explain this unemployment state dependence.

Keywords: State dependence; unemployment benefits; mixed proportional hazard model; unobserved heterogeneity (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1080/0269217042000266436

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