Another look at unemployment duration: exit to a permanent vs. a temporary job

We investigate the determinants of exit rates from unemployment to permanent and temporary jobs. First, we present a theoretical model to discuss the effects of reservation wages, unemployment benefits and job offers on the exit probabilities to permanent and temporary jobs. Then, using micro data from the Spanish Labour Force Survey we estimate a multinomial duration model, including unemployment benefits, the cycle and personal characteristics. Important differential effects are unmasked by distinguishing by type of employment. The negative impact of receiving benefits dominates the combined effect of business cycle variables in exits to temporary employment but not to permanent jobs. (Copyright: Fundación SEPI)