An Empirical Investigation of School to Work Transition Using the Gompertz Model

by | Jan 16, 2020 | DOI 2018

Ana Gorenca
Aleksandër Moisiu University of Durrës, Durrës, Albania
DOI: https://doi.org/10.31410/eraz.2018.330

​ ​​ ​​

4th International Conference – ERAZ 2018 – KNOWLEDGE BASED SUSTAINABLE ECONOMIC DEVELOPMENT, Sofia- Bulgaria, June 7, 2018, CONFERENCE PROCEEDINGS published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia;  Faculty of Business Studies, Mediterranean University – Podgorica, Montenegro; University of National and World Economy – Sofia, Bulgaria; Faculty of Commercial and Business Studies – Celje, Slovenia; Faculty of Applied Management, Economics and Finance – Belgrade, Serbia, ISBN 978-86-80194-12-7

Abstract

This paper investigates the impact of socio-economic factors on the unemployment spell of fresh graduates. The data sample is drawn from the Living Standards Measurement Survey of Albania in 2012. We restrict the sample to only those aged from 19 to 35 years old to reduce the heterogeneity among unemployed graduates. In addition, we drop all observations with unemployment spell greater than 19 years given that the minimum working age in Albania is 16. The job-search theory constitutes the theoretical framework of this work. The socio-economic factors we examine in this paper are age, gender, education attainment, residence and occupation. The empirical part employs the Gompertz hazard proportional model. to determine the effect of socio-economic factors on the first unemployment period of fresh graduates. Our findings indicate that the Gompertz model provides a better fit to the data based on the AIC value compared to other models including the log-logistic and Cox models. Further, the estimates in the Gompertz specification are in line with the theoretical findings of the job-search theory. Education, age, gender and occupation are significant determinants of the first unemployment spell. In all models, the indicator of urban residence results insignificant. Moreover, unemployment duration increases with age. Lastly, those with high levels of education and high occupation profiles have higher odds of exiting from unemployment.  

Key words

unemployment spell, hazard rate, proportional hazard, Gompertz


References

  1. Alikaj, E., & Shehaj, E. (2015, November). Determinants of transition from school to work in Albania. In Proceedings of 4th UBT Annual International Conference on Business, Technology and Innovation (p. 65).
  2. Arellano, M., Bentolila, S., & Bover, O. (2001). The distribution of earnings in Spain during the 1980s: the effects of skill, unemployment and union power (No. 2770). CEPR Discussion Papers.
  3. Arendt, J. N., Rosholm, M., & Jensen, T. P. (2005). The importance of literacy for employment and unemployment duration. Syddansk Universitet.
  4. Borjas, G. J. (2010). Labor Economics (Vol. 3). Boston, MA: McGraw-Hill.
  5. Brännström, L., & Stenberg, S. Å. (2007). Does social assistance recipiency influence unemployment? Macro-level findings from Sweden in a period of turbulence. Acta Sociologica, 50(4), 347-362.
  6. Cahuc, P., & Zylberberg, A. (2004). Labor economics. MIT press.
  7. Caliendo, M., & Kopeinig, S. (2005) Some Practical Guidance for the implementation of Propensity Score Matching. IZA Discussion Paper No. 1588. The Institute for the Study of Labor. Bonn.
  8. Cameron, A. C., & Trivedi, P. K. (2005). Microeconometrics: methods and applications. Cambridge university press.
  9. Canals, V., & Diebolt, C. (2002). France. The Transition from Higher Education to the Labour Market. International Perspectives and Challenges, 13-54.
  10. Collier, W. (2003). The impact of demographic and individual heterogeneity on unemployment Duration: A regional study (No. 03, 02). Department of Economics Discussion Paper, University of Kent.
  11. Degen, K. (2014). Winning versus Losing: How Important are Reservation Wages for Unemployment Duration?
  12. Du, F., Yang, J. C., & Dong, X. Y. (2007). Why Do Women Have Longer Unemployment Durations than Men in Post-Restructuring Urban China?. PEP-PMMA.
  13. Erbenova, M., Sorm, V., & Terrell, K. (1998). Work incentive and other effects of social assistance and unemployment benefit policy in the Czech Republic. Empirical Economics, 23(1-2), 87-120.
  14. Farber, H. S. (2005). What do we know about job loss in the United States? Evidence from the Displaced Workers Survey, 1984-2004. Economic Perspectives, 29(2), 13-29.
  15. Flister, L. D. The Effects of Social Assistance Programs on the Duration of Unemployment Spells: Evidence from Saskatchewan. Journal of Prices & Markets, 70.
  16. Foley, M. C. (1997). Determinants of unemployment duration in Russia (No. 779). Center Discussion Paper.
  17. Fougère, D., Crépon, B., & Ferracci, M. (2007). Training the Unemployed in France: How Does It Affect Unemployment Duration and Recurrence?. Institute for the Study of Labor, France.
  18. Gorenca, A. (2018). Determinants of the school to work transition. Manuscript submitted for publication.
  19. Gorenca, A. (2018). An application of Weibull and Exponential distributions in school to work transition models. Manuscript submitted for publication.
  20. Hildreth, A. K., Millard, S. P., Mortensen, D. T., & Taylor, M. P. (1998). Wages, work, and unemployment. Applied Economics, 30(11), 1531-1547.
  21. Jaunky, V. C., & Khadaroo, A. J. (2007, June). The School-to-Work Transition for University Graduates in Mauritius: A Duration Model Approach. In Second Baltic-Nordic Conference on Survey Sampling, University of Finland, Kuusamo, Finland (pp. 2-7).
  22. Kettunen, J. (1997). Education and unemployment duration. Economics of Education Review, 16(2), 163-170.
  23. Kyyrä, T., Parrotta, P., & Rosholm, M. (2009). The Effect of Receiving Supplementary UI Benefits on Unemployment Duration (No. 3920). Institute for the Study of Labor (IZA).
  24. Landmesser, J. (2010). Assessing the impact of training on unemployment duration using hazard models with instrumental variables. Metody Ilościowe w Badaniach Ekonomicznych, 1(11), 100-109.
  25. Lassibille, G., Gómez, L. N., Ramos, I. A., & de la O Sánchez, C. (2001). Youth transition from school to work in Spain. Economics of Education Review, 20(2), 139-149.
  26. Lin, Y. and Hsu, C. 2013.The effects of over-education on unemployment duration: Evidence from Taiwan. Journal of Emerging Issues in Economics 5 (2013): 430-443.
  27. Lynch, L. M. (1989). The youth labor market in the eighties: determinants of re-employment probabilities for young men and women. The Review of Economics and Statistics, 37-45.
  28. McCall, J. J. (1970). Economics of Information and Job Search. The Quarterly Journal of Economics, 84(1), 113-126.
  29. McGuinness, S., O’Connell, P. J., & Kelly, E. (2014). The impact of training programme type and duration on the employment chances of the unemployed in Ireland. The Economic and Social Review, 45(3, Autumn), 425-450.
  30. Mortensen, D. T. (1970). Job search, the duration of unemployment, and the Phillips curve. The American Economic Review, 60(5), 847-862.
  31. Mortensen, D. T. (1977). Unemployment insurance and job search decisions. ILR Review, 30(4), 505-517.
  32. Mortensen, D. T. (1986). Job search and labor market analysis. Handbook of labor economics, 2, 849-919.
  33. Mortensen, D. T., & Pissarides, C. A. (1994). Job creation and job destruction in the theory of unemployment. The review of economic studies, 61(3), 397-415.
  34. Nickell, S. (1997). Unemployment and labor market rigidities: Europe versus North America. Journal of Economic perspectives, 11(3), 55-74.
  35. O’Higgins, N. (2015). Youth unemployment (No. 103). IZA Policy Paper.
  36. Pellizzari, M. (2006). Unemployment duration and the interactions between unemployment insurance and social assistance. Labour Economics, 13(6), 773-798.
  37. Richardson, K., & van den Berg, G. J. (2002). The effect of vocational employment training on the individual transition rate from unemployment to work. Swedish Economic Policy Review, (Review 8), 175-213.
  38. Riddell, W. C., & Song, X. (2011). The impact of education on unemployment incidence and re-employment success: Evidence from the US labour market. Labour Economics, 18(4), 453-463.
  39. Smet, M. (2012, January). The impact of vocational training programs on the duration of unemployment spells of school leavers from technical and vocational secondary education in Flanders. In 7th Annual International Symposium on Economic Theory, Policy and Applications 23-26 July 2012: economic abstracts (p. 67). The Athens Institute For Education And Research.
  40. Stigler, G. J. (1961). The economics of information. Journal of political economy, 69(3), 213-225.
  41. Stigler, G. J. (1962). Information in the labor market. Journal of political economy, 70(5, Part 2), 94-105.
  42. Tansel, A., & Taşçı, H. M. (2010). Hazard analysis of unemployment duration by gender in a developing country: The case of Turkey. Labour, 24(4), 501-530.
  43. Van Leuvensteijn, M., & Koning, P. (2000). Duration dependence in unemployment insurance and social assistance: Consequences of profiling for the unemployed (Vol. 163). CPB Netherlands Bureau for Economic Policy Analysis.​

Gorenca_An Empirical Investigation of School to Work Transition Using the Gompertz Model_pp_330-339Download