Česká národní banka


CNB > Economic research > Research publications > CNB Working paper series > 2007 > U.S. Unemployment Duration: Has Long Become Longer or Short Become Shorter?

U.S. Unemployment Duration: Has Long Become Longer or Short Become Shorter?

Pedro Portugal

The U.S. labor market has been experiencing unprecedented high average unemployment duration. The shift in the unemployment duration distribution can be traced back to the early nineties. In this study, censored quantile regression methods are employed to analyze the changes in the U.S. unemployment duration distribution. We explore the decomposition method proposed by Machado and Mata (2005) to disentangle the contribution of the changes generated by the covariate distribution and by the conditional distribution. The data used in this inquiry are taken from the nationally representative Displaced Worker Surveys of 1988 and 1998. We provide evidence that the change in the unemployment duration distribution is mainly produced by the opposing effects of a sharp rise in job-to-job transition rates and an increased sensitivity of unemployment duration to unemployment rates. Compositional changes in the labor force played a limited role. We rationalize our findings by arguing that improved screening technology is likely to be the relevant underlying mechanism at work.

JEL Codes: C14, C21, C41, J64

Keywords: Quantile Regression, Duration Analysis, Unemployment Duration, Counterfactual Decomposition.

Issued: December 2007

Download: CNB WP 17/2007 (pdf, 628 kB)