Estimating the probability of leaving unemployment using uncompleted spells from repeated cross-section data

Abstract

We propose a new econometric estimation method for analyzing the probability of leaving unemployment using uncompleted spells from repeated cross-section data, which can be especially useful when panel data are not available. The proposed method-of-moments-based estimator has two important features: (1) it estimates the exit probability at the individual level and (2) it does not rely on the stationarity assumption of the inflow composition. We illustrate and gauge the performance of the proposed estimator using the Spanish Labor Force Survey data, and analyze the changes in distribution of unemployment between the 1980s and 1990s during a period of labor market reform. We find that the relative probability of leaving unemployment of the short-term unemployed versus the long-term unemployed becomes significantly higher in the 1990s.

House lock and structural unemployment

“…The econometric approach used for the formal analyses of unemployment duration is adapted from Güell and Hu (2006;henceforth "GH"). GH developed a generalized method of moments (GMM) approach that enables estimation of detailed covariate effects on unemployment duration at the individual level, along with estimation of the conditional effects of duration dependence and the impact of time-varying factors such as labor market conditions.…”

“…My analysis of unemployment duration relies on a recently developed econometric approach (Güell and Hu 2006) applied to monthly microdata on unemployed individuals from the U.S. Current Population Survey (CPS). Unlike other approaches to the analysis of unemployment spells in repeated cross-sections, this method enables direct estimation of the influence of detailed individual characteristics and duration dependence, in addition to measures of general economic conditions and other timevarying factors, in the determination of unemployment duration (see also Valletta 2011).…”

House Lock and Structural Unemployment

“…The econometric approach used for the formal analyses of unemployment duration in this paper is adapted from Güell and Hu (2006;henceforth "GH"). GH developed an approach to duration analysis in repeated cross-sections such as the CPS survey that enables estimation of the effects of individual covariates as well as duration dependence and time-varying factors such as local labour market conditions.…”

“…My analysis of unemployment duration relies on a recently developed econometric approach (Güell and Hu 2006) applied to monthly microdata on unemployed individuals from the U.S. Current Population Survey (CPS). Unlike other approaches to the analysis of unemployment spells in repeated cross-sections, this method enables direct estimation of the influence of local economic conditions, conditional on detailed individual characteristics and duration dependence (see also Valletta 2011).…”

Income mobility in the developing world: Recent approaches and evidence

“…Longitudinal village studies provide a setting within which such a broader analysis may be broached-although of course these entail stepping back from making inferences to the larger populations. 4 2 Bourguignon et al (2004) and Guell and Hu (2006) apply pseudo-panel methods to analyse poverty dynamics, but are compelled to make a number of assumptions that are difficult to verify. The former are also dependent on at least three rounds of cross-section data.…”