Events at CERGE-EI

Monday, 14 March, 2016 | 16:30 | Applied Micro Research Seminar

Prof. Maia Güell (U. of Edinburgh) “Unemployment Duration Variance Decomposition à la ABS: Evidence from Spain”

Prof. Maia Güell

The University of Edinburgh, United Kingdom

Authors: Maia Güell and Cristina Lafuente

Abstract: In a recent paper, Alvarez, Borovičková and Shimer (ABS) have proposed a new method for estimating the different components of the duration of unemployment using administrative data and have applied it to Austria.  We apply their method to Spain using Social Security data. Administrative data have many advantages compared to Labor Force Survey data, but we note that there are some incompleteness that needs to be enhanced in order to use the data for unemployment analysis (e.g., unemployed workers that run out of unemployment insurance have no labor market status in the data).  The degree and nature of such incompleteness is country-specific and are particularly important in Spain. We deal with these data issues in a systematic way by using information from the Spanish LFS data as well as institutional information. We hope that our approach will provide a useful way to apply the ABS method in other countries. Our findings are: (i) the unemployment decomposition is quite similar in Austria and Spain, specially when minimizing the effect of fixed-term contracts in Spain. (ii) the constant component is the most important one; while (total)  heterogeneity and duration dependence are roughly comparable. (iii) also, we do not find big differences in contribution of the different components along the business cycle.