new jobs or recalls? flow dynamics in austrian unemployment reconsidered

abstract: the results of this study demonstrate the importance of explicitly accounting for the possibility of recalls in the analysis of unemployment composition and the determinants of unemployment spell durations in austria. in our sample covering unemployment spells in 1985 we find that recalls accounted for nearly one half of the employment to unemployment to re-employment transitions with the probability of recall being mainly dependent on industry and job characteristics related to seasonal work. in particular, the estimation results from a simple logistic model suggest that temporary layoffs may constitute a regular pattern in the work life of individuals affected by that type of unemployment. we then analyze unemplyoment spell durations in a competing risks framework and, indeed, find significantly different hazards for the two types of risks, new jobs and recalls. while both exit rates exhibit positive duration dependence according to our estimates, the new job hazard is considerably flatter than the recall hazard. the estimated effects of the covariates are also quite different across new jobs and recalls. thus, failure to distinguish between different types of layoffs may lead to a serious misperception of unemployment dynamics in austria . this assertion conforms well with previous findings for the u.s and the danish labour market and suggests a reinspection of re-employment patterns in other european labour markets as well.