New Insights on Unemployment Duration and Post Unemployment Earnings in Germany: Censored Box-Cox Quantile Regression at Work

Fitzenberger, Bernd ; Wilke, Ralf A.

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URN: urn:nbn:de:bsz:180-madoc-14874
Document Type: Working paper
Year of publication: 2007
The title of a journal, publication series: None
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: C13 C14 J64 ,
Subject headings (SWD): Box-Cox-Transformation , Risikoanalyse , Arbeitslosigkeit , Deutschland <Westliche Länder> , Arbeitslosengeld
Keywords (English): Box Cox quantile regression , hazard rate , unemployment , wage
Abstract: In light of nonstationary search theory (van den Berg, 1990), this paper estimates the effects of benefit entitlement periods and the size of unemployment benefits on unemployment durations and post-unemployment earnings in West Germany. For the unemployment duration, we estimate censored Box-Cox quantile regression, which is robust with respect to the specification of the unobserved error distribution and avoids the common proportional hazard assumption. Our results suggest that the length of benefit entitlement is only of minor importance for the duration of search unemployment and for post unemployment wages. A high wage replacement rate in the low wage sector seem to considerably elongate the duration of unemployment and it is associated with higher post unemployment wages.
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