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Title: Long Has Become Too Long: A Close Look at Unemployment Transition Rates in the 2007-2009 Recession

Citation Type: Miscellaneous

Publication Year: 2012

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Abstract: Since the trough of our most recent recession, the unemployment rate has began to decline slowly. However, unlike any other recession, the average number of weeks the unemployed remain without a job continues to increase. The lack of correlation has left many perplexed as to how the 2007-2009 recession differs from previous recessions. This paper investigates how unemployment transition rates during the 2007-2009 recession changed in the presence of observable and unobservable heterogeneity compared to previous recessions. Using data from the Current Population Survey and a separated markets approach, the hazard rate for various types of people is estimated using maximum likelihood estimation. Furthermore, I estimate the average lengths of unemployment for various groups of people and the proportion of people falling into these groups to see if the lengths and proportions have changed. Results show that for some types of people the hazard rate has considerably changed compared to previous recessions. Additionally, the findings suggest that while lengths of unemployment for various groups of people have remained unchanged, the proportions of people falling into these groups have changed during our most recent recession.

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Authors: Sundheim, Elizabeth

Publisher: College of the Holy Cross

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

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