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Title:Why did the average duration of unemployment become so much longer? PDF Logo
Authors:Mukoyama, Toshihiko
Sahin, Aysegül
Issue Date:2004
Series/Report no.:Staff Report, Federal Reserve Bank of New York 194
Abstract:This paper examines the causes of the observed increase in the average duration of unemployment over the past thirty years. First we analyze whether changes in the demographic composition of the U.S. labor force, particularly the age and gender composition, can explain this increase. We then consider the contribution of institutional changes, such as the change in the generosity and coverage of unemployment insurance. We find that changes in the composition of the labor force and institutional changes can only partially account for the longer duration of unemployment. We construct a job search model and calibrate it to U.S. data. The results indicate that more than 70 percent of the increase in the duration of unemployment over the past thirty years can be attributed to an increase in within-group wage inequality
JEL:E24
J64
Document Type:Working Paper
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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