Unemployment Durations and Local Labour Market Conditions

Unemployment durations, and the unemployment rate, vary across the UK's regions.There is also substantially variation within regions, at a local authority district level, and within local authority districts at a neighbourhood... [ view full abstract ]

Unemployment durations, and the unemployment rate, vary across the UK's regions.

There is also substantially variation within regions, at a local authority district level, and within local authority districts at a neighbourhood or ward level.

The economic and social causes of variations in the unemployment durations at each of these geographic levels is potentially different.

While differences accross regions might be explained by differences in labour demand, at the neighbourhood level explanations are more likely to involve selection effects or social causes.

The local authority district is an intermediate level geography; dfferences in unemployment durations could be a combination of these processes.

From a policy perspective it is important to be able to identify the geographic scale at which deficiencies in labour demand are operating.

Unemployment spells, taken from seventeen waves of the British Household Panel Survey (BHPS), are used in this paper to identify the contribution that deficiencies in local labour demand may be having on aggregate unemployment.

We find that living in a local authority district with high unemployment is not associated with longer spells of unemployment; differences in spell lenghts are explained by regional effects, businessess cycle and individual effects.