EconPapers    
Economics at your fingertips  
 

Assessing Unemployment Traps in Belgium Using Panel Data Sample Selection Models

Anna D'Addio, Isabelle De Greef () and Michael Rosholm ()
Additional contact information
Isabelle De Greef: Université catholique de Louvain

No 669, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we investigate whether unemployment traps exist and are significant in the transition from unemployment into employment in Belgium. In order to assess them, we use panel data sample selection models. Specifically, we estimate a parametric random effects models composed by a wage equation and a selection equation by maximum likelihood techniques. The income ratios have been computed for every individual in the sample by using the predicted wages obtained from the estimation of the wage equation corrected for sample selectivity. The empirical analyses has exploited the data extracted from the waves 1993-1997 of the Panel Study of Belgian Household and has been led separately on (unbalanced) samples of men and women. The estimation results suggest significant differences in the behaviour of these two groups. The experience of long periods of unemployment in the past is particularly important: long-term unemployed people have difficulties in re-integrating the labour market and they obtain low salaries when they succeed in finding employment. Long unemployment spells are likely to have a “scarring” effect on subsequent earnings. Moreover, the computation of income ratios for all individuals highlights the importance of unemployment traps for the women present in the sample. Indeed, their expected wage is often lower than their income while being unemployed. A significant proportion of the available samples (men and women) is shown to enter employment although this transition is accompanied by a substantial loss in their disposable income.

Keywords: scarring effect; unemployment traps; panel data sample selection models; wage equation; predicted wages (search for similar items in EconPapers)
JEL-codes: C33 C34 J33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2002-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://ftp.iza.org/dp669.pdf (application/pdf)

Related works:
Working Paper: Assessing Unemployment Traps in Belgium using Panel Data Sample Selection models (2002) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp669

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().

 
Page updated 2019-11-12
Handle: RePEc:iza:izadps:dp669