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Federal Reserve Bank of St. Louis
Working Papers
Long-Term Unemployment: Attached and Mismatched?
David Wiczer
Abstract

In this paper, I quantify the contribution of occupation-specific shocks and skills to unemployment duration and its cyclical dynamics. I quantify specific skills using microdata on wages, estimating occupational switching cost as a function of the occupations' difference in skills. The productivity shocks are consistent with job finding rates by occupation. For the period 1995-2013, the model captures 69.5% of long-term unemployment in the data, while a uniform finding rate delivers only 47.2%. In the Great Recession, the model predicts 72.9% of the long-term unemployment that existed in the data whereas a uniform finding rate would predict 57.8%.


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David Wiczer, Long-Term Unemployment: Attached and Mismatched?, Federal Reserve Bank of St. Louis, Working Papers 2015-42, 02 Dec 2015.
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Keywords: Occupational Choice; Human Capital; Unemployment Duration
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