UNEMPLOYMENT DYNAMICS AND DURATION DEPENDENCE IN FRANCE, THE NETHERLANDS AND THE UNITED-KINGDOM

This paper analyses unemployment dynamics in the French, Dutch and UK labour market. It presents a method to distinguish between the effects of duration dependence and unobserved heterogeneity on the exit rate out of unemployment. It turns out that for British male unemployed there is strong genuine negative duration dependence. For French unemployed there is no strong duration dependence during the first year of unemployment, while for Dutch unemployed there is non-monotonic duration dependence. For all groups of French and Dutch individuals significant unobserved heterogeneity is found. For UK male unemployed, heterogeneity seems to be empirically unimportant.