Distribution and determinants of lifetime unemployment

The empirical literature on unemployment almost exclusively focuses on the duration of distinct unemployment spells. In contrast, we use a unique administrative micro data set for the time span 1975–2004 to investigate individual lifetime unemployment — defined as the cumulative length of all unemployment spells over a 25-year period. This new perspective enables us to answer questions regarding the long-term distribution and determinants of unemployment for birth cohorts 1950–1954. We show that lifetime unemployment is highly concentrated on a small part of the population. With censored quantile regressions we investigate the long-lasting influence of bad luck early in the professional career: Controlling for individual and firm characteristics we find that choosing at a young age what turns out to be an unfavorable occupation significantly increases the predicted amount of lifetime unemployment.

► We use micro data for the period 1975–2004 to investigate lifetime unemployment. ► We focus on the long-term distribution and determinants of unemployment. ► Lifetime unemployment is highly concentrated on a small part of the population. ► Censored quantile regressions reveal the long-lasting influence of early bad luck. ► Choosing at young age an unfavorable occupation increases lifetime unemployment.