Regional Variations in Unemployment Duration and Discouragement Probabilities

We analyse the transitions from unemployment into employment and non-participation, using a mixed proportional hazard framework. The regional dierences in transition intensities, individual eects and discouragement probabilities are investigated using Danish registry data for 1985-1998. The study reveals two regions with distinct labour market properties: the Copenhagen area and Western-Jutland. The former one is characterised by a long unemployment duration and a high discouragement rate, the situation is opposite in the latter region. Regional dierences in workers composition are roughly as important as dierences in labour demand in explaining the variation. A high discouragement probability is associated with a long unemployment duration but not with a high unemployment rate. We show that the hazard rate from unemployment into non-participation increased in most of the counties, even during the economic growth-period.