Unemployment and the durational structure of exit rates
|Title:||Unemployment and the durational structure of exit rates||Authors:||Whelan, Karl||Permanent link:||http://hdl.handle.net/10197/254||Date:||Oct-1997||Abstract:||This paper presents a simple model of wage bargaining and employment flows designed to address the effects of policies to increase the rate of exit to employment of the long-term unemployed. Exit rates from long- and short-term unemployment have two effects on the unemployment rate: a positive one as high exit rates strengthen current employees' bargaining positions, and thus wages, and a negative one as faster outflows from unemployment reduce the stock of unemployed. Thus, there is a trade-off between the exit rate from long-term unemployment and the exit rate from short-term unemployment. The paper's principal result is that, in steady-state, increasing the exit rate from long-term unemployment reduces the unemployment rate. Dynamic simulations show that raising the exit rate of the long-term unemployed leads to a decrease in both the mean and variance of the unemployment rate.||Type of material:||Working Paper||Publisher:||Federal Reserve||Keywords:||Unemployment; Duration dependence||Subject LCSH:||Unemployment
|DOI:||10.2139/ssrn.94209||Language:||en||Status of Item:||Not peer reviewed|
|Appears in Collections:||Economics Research Collection|
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