Unemployment Duration and Competing Risks: Evidence from Sweden

The determinants of unemployment duration are studied in the presence of multiple exits out of unemployment. The results indicate that state aggregation may be a severe problem in empirical analysis of a labor market such as the one in Sweden. Estimating a joint model for all transitions out of unemployment leads to biased estimates, since different transitions are governed by different mechanisms. The results also indicate positive duration dependence in both transitions to regulate employment and transitions out of the labor force, but no duration dependence in transitions to public labor market programs.