Unemployment is one of the key macroeconomic variables used to assess the performance of an economy. However, there is a bias towards conceptualizing unemployment solely through its predominant measure of rates. Considering that rates alone do not reflect labor market conditions, especially in developing countries, it is crucial to include unemployment duration in analyzing labor market efficacy and the larger economy. This paper utilizes longitudinal data from CMIE to understand the determinants of unemployment duration through an OLS linear regression and survival analysis. It finds that the groups that experience longer spells of unemployment are young and old individuals, the highly educated, and upper caste individuals. Nonparametric survival analysis is also employed to account for censoring through the hazard and survival function. This model also finds that duration dependence is non-monotonic with individuals experiencing high initial re-employment probabilities before experiencing a decline in their hazard rates. However, analysis of re-employmentwages and occupation indicates a positive association with unemployment duration which indicates potential benefits to extended job search.

Author:

Roshan Kannan