Unemployment duration and individual heterogeneity: a regional study

This paper investigates the impact of individual heterogeneity and regional influences on unemployment duration utilizing cross-section microeconomic data drawn from a representative random survey of individual job seekers for the English county of Kent. These individual-level data are unique in that they provide information concerning the personal characteristics of job seekers, alongside direct observations of both their reservation wages and job search behaviour. Such data are rare and, to the authors' knowledge, have never before been utilized in a regional context. Thus, the paper contributes to the empirical literature by analysing the extent to which individual heterogeneity and intra-regional variation in labour market opportunities impact upon the observed distribution of unemployment duration(s). In particular, the paper analyses the extent to which the duration of unemployment is determined by individual choice. This is an important issue for the formation and evaluation of policy. These results provide new insights into the long-term efficacy of current microeconomic supply-side initiatives such as ‘The New Deal’ and related welfare to work policies. They also advocate a more active role for macroeconomic demand-led management and provide support for a more integrated strategy for policy implementation at the urban and regional level.