@article {105531,
	title = {Long-Term Unemployment and the Great Recession: The Role of Composition, Duration Dependence, and Non-Participation},
	journal = {Journal of Labor Economics},
	volume = {34},
	number = {S1, Part 2},
	year = {2016},
	pages = {S7-S54},
	abstract = {We explore the extent to which composition, duration dependence, and labor force\&nbsp;non-participation can account for the sharp increase in the incidence of long-term\&nbsp;unemployment (LTU) during the Great Recession. We first show that compositional\&nbsp;shifts in demographics, occupation, industry, region, and the reason for unemployment jointly account for very little of the observed increase in LTU. Next, using panel\&nbsp;data from the Current Population Survey for 2002-2007, we calibrate a matching\&nbsp;model that allows for duration dependence in the exit rate from unemployment and\&nbsp;for transitions between employment (E), unemployment (U), and non-participation\&nbsp;(N). We model the job-finding rates for the unemployed and non-participants, and\&nbsp;we use observed vacancy rates and the transition rates from E-to-U, E-to-N, N-to-U,\&nbsp;and U-to-N as the exogenous forcing variablesof the model. The calibrated model\&nbsp;can account for almost all of the increase in the incidence of LTU and much of the\&nbsp;observed outward shift in the Beveridge curve between 2008 and 2013. Both negative duration dependence in the job-finding rate for the unemployed and transitions\&nbsp;to and from non-participation contribute significantly to the ability of the model to\&nbsp;match the data after 2008.},
	url = {http://www.journals.uchicago.edu/doi/abs/10.1086/682390},
	author = {Kory Kroft and Fabian Lange and Matthew J. Notowidigdo and Lawrence F. Katz}
}
