Unemployment duration, layoffs and competing risks

Abstract

The main objective of this paper is to investigate the determinants of unemployment duration in a competing risks framework with two destination states: employment and inactivity. In particular, we analyze labour market trajectories of job losers and workers without previous labour experience using data from the Spanish Labour Force Survey (EPA) for the period 1992-2004. We find that male workers, people aged 25-34, higher educated job losers in regions with low unemployment rates and workers with previous employment experience exhibit higher exit rates from unemployment into a job. On the contrary, the same variables present a negative effect on the probability of exiting from unemployment to inactivity. We also find that non-claimants of unemployment benefits exit from unemployment faster than claimants do. Finally, the existence of a dead-end job effect is detected in the Spanish labour market during the 1990s.