Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155580
Authors: 
Bentolila, Samuel
García-Pérez, J. Ignacio
Jansen, Marcel
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6338
Abstract: 
Long-term unemployment reached unprecedented levels in Spain in the wake of the Great Recession and it still affects around 57% of the unemployed. We document the sources that contributed to the rise in long-term unemployment and analyze its persistence using state-of-the-art duration models. We find pervasive evidence of negative duration dependence, while personal characteristics such as mature age, lack of experience, and entitlement to unemployment benefits are key to understand the cross-sectional differences in the incidence of long-term unemployment. The negative impact of low levels of skill and education is muted by the large share of temporary contracts, but once we restrict attention to employment spells lasting at least one month these factors also contribute to a higher risk of long-term unemployment. Surprisingly, workers from the construction sector do not fare worse than similar workers from other sectors. Finally, self-reported reservation wages are found to respond strongly to the cycle, but much less to individual unemployment duration. In view of these findings, we argue that active labour market policies should play a more prominent role in the fight against long-term unemployment while early activation should be used to curb inflows.
Subjects: 
long-term unemployment
great recession
duration models
survival probability
Spain
JEL: 
J63
J64
J65
C41
Document Type: 
Working Paper

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