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Research ArticleArticles

Unemployment Duration

Competing and Defective Risks

John T. Addison and Pedro Portugal
Journal of Human Resources, January 2003, 38 (1) 156-191; DOI: https://doi.org/10.3368/jhr.38.1.156
John T. Addison
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Pedro Portugal
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Abstract

This paper examines the determinants of unemployment duration in a competing risks framework with two destination states: inactivity and employment. The innovation is the recognition of defective risks. A polynomial hazard function is used to differentiate between two possible sources of infinite durations. The first is produced by a random process of unlucky draws, the second by workers rejecting a destination state. The evidence favors the mover-stayer model over the search model. Refinement of the former approach, using a more flexible baseline hazard function, produces a robust and more convincing explanation for positive and zero transition rates out of unemployment.

  • Received February 2000.
  • Accepted November 2001.

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Journal of Human Resources
Vol. 38, Issue 1
1 Jan 2003
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Unemployment Duration
John T. Addison, Pedro Portugal
Journal of Human Resources Jan 2003, 38 (1) 156-191; DOI: 10.3368/jhr.38.1.156

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Unemployment Duration
John T. Addison, Pedro Portugal
Journal of Human Resources Jan 2003, 38 (1) 156-191; DOI: 10.3368/jhr.38.1.156
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