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IZA
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Separability of Duration Dependence and Unobserved Heterogeneity
by
Hélène Turon
(April 2003)
Abstract:
Mixed proportional hazard models are commonly used to estimate duration dependence and
unobserved heterogeneity in unemployment exit rates. Some strong assumptions are made
in this framework, i.e. that the various influences on the individual unemployment exit rate are
separable. The model we use in this paper allows for both the individual duration
dependence pattern and the inflow composition to exhibit cyclical variations, thereby relaxing
two of the three separability assumptions. The aim of this paper is to assess the validity of
the third separability assumption, namely that the duration dependence pattern is the same
for all individuals.
Text: See Discussion Paper No. 754
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