We propose a three-step factor-flows simulation-based approach to forecast the duration distribution of unemployment … history. Step 2: relate the aggregate components to the overall unemployment rate using a factor model. Step 3: combine the … individual duration dependence, factor structure, and an auxiliary forecast of the unemployment rate to simulate a panel of …

The flow opportunity cost of moving from unemployment to employment consists of foregone public benefits and the … is procyclical and volatile over the business cycle. The estimated cyclicality implies far less unemployment volatility …