Heterogeneity versus duration dependence with competing risks: an application to the labor market |
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| Authors: | Richard Robb Halina Frydman Andrew Robertson |
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| Affiliation: | 1. School of International and Public Affairs, Columbia University, New York, U.S.A.;2. New York University Stern School of Business, New York, U.S.A.;3. 11 Waterloo Place, London, UK |
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| Abstract: | Two hypotheses can explain the declining probability of gaining employment as an unemployment spell wears on: heterogeneity of the unemployed versus duration dependence. The nonparametric tests developed in the literature for testing duration dependence would not account for the fact that an unemployment spell can terminate in other ways than employment. The nonparametric tests developed in this paper extend, under certain conditions, those tests to competing risks. We illustrate our test using US unemployment data in which we find little consistent evidence for duration dependence. © 2017 The Authors. Applied Stochastic Models in Business and Industry published by John Wiley & Sons, Ltd. |
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| Keywords: | duration dependence heterogeneity competing risks nonparametric tests |
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