Skip to main content

Fourth Quarter 2016, 
Vol. 98, No. 4
Posted 2016-12-05

Duration Dependence and Composition in Unemployment Spells

by James D. Eubanks and David Wiczer

This article reviews the evidence for duration dependence in job-finding rates and its implications for the unemployment duration distribution. The authors document duration dependence and show that it exists within nearly every demographic subgroup. Then, they examine the implications of duration dependence on unemployment duration, emphasizing that a uniform job-finding rate that does not incorporate duration dependence understates unemployment duration. Finally, they explore a composition-based approach to duration dependence, where they solve for the distribution of pre-existing heterogeneity that is consistent with observed duration dependence. The authors look at how this distribution varies cyclically and, in particular, during the Great Recession. The largest changes occur at the low finding-rate tail of this distribution.





Subscribe to our newsletter


Follow us

Back to Top