McVicar, Duncan and Podivinsky, Jan
Duration dependence and routes out of joblessness for young people , Belfast, UK Northern Ireland Economic Research Centre 40pp.
(Northern Ireland Economic Research Centre Working Paper Series, 66).
Full text not available from this repository.
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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