This paper analyzes unemployment dynamics in the French, Dutch, and U.K. labor market. It presents a method to distinguish between the effects of duration dependence and unobserved heterogeneity on the exit rate out of unemployment. It turns out that for British male unemployed there is strong...

In this paper, the authors examine a rather popular eyeball check which has been used to establish the presence of state dependence in aggregate unemployment duration data. They correct the literature by showing that this check may well lead to wrong conclusions.