Heterogeneity and Unemployment Dynamics

Hie Joo Ahn and James Hamilton

No 22451, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops new estimates of flows into and out of unemployment that allow for unobserved heterogeneity across workers as well as direct effects of unemployment duration on unemployment-exit probabilities. Unlike any previous paper in this literature, we develop a complete dynamic statistical model that allows us to measure the contribution of different shocks to the short-run, medium-run, and long-run variance of unemployment as well as to specific historical episodes. We find that changes in the inflows of newly unemployed are the key driver of economic recessions and identify an increase in permanent job loss as the most important factor.

JEL-codes: E24 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-mac
Note: EFG LS ME
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Citations: View citations in EconPapers (9)

Published as Hie Joo Ahn & James D. Hamilton, 2020. "Heterogeneity and Unemployment Dynamics," Journal of Business & Economic Statistics, vol 38(3), pages 554-569.

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Working Paper: Heterogeneity and Unemployment Dynamics (2016)
Working Paper: Heterogeneity and Unemployment Dynamics (2016)
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