Duration dependence and routes out of joblessness for young people

McVicar, Duncan and Podivinsky, Jan (2001) Duration dependence and routes out of joblessness for young people (Northern Ireland Economic Research Centre Working Paper Series, 66) Belfast, UK. Northern Ireland Economic Research Centre 40pp.

Abstract

This paper examines young people’s exits from joblessness using recent survey data for Northern Ireland. A reduced form search model is estimated, allowing for a fully flexible specification of the baseline hazard function, with young people exiting joblessness into either employment or education and training. There is evidence of negative duration dependence in the conditional probability of exiting joblessness. The relationship is not monotonic, however, there being a small ‘spike’ in the hazard rate around 5-6 months consistent with an effect of the introduction of the New Deal for Young People in 1998.
The paper argues that, given negative duration dependence, policy makers would do better to increase targeted interventions on those facing the toughest barriers to employment in the first month of joblessness, where possible, rather than wait for six months as is the current case with New Deal. The main barriers to exit from joblessness observable in the data include caring for a young child, having a family background of unemployment and low levels of job search. Having poor qualifications also acts as a barrier to exit from joblessness, particularly into education. The introduction of Job Seekers Allowance in 1996 is correlated with shorter jobless spells. Further research is suggested to examine these issues in more detail, and in particular to examine in greater depth the effects of the introduction of the New Deal on duration dependence in joblessness among young people.

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Contributors

Author: Jan Podivinsky

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