Return to employment, after a period of unemployment, is analyzed for a large sample
of Swedish occupationally disabled workers. A piece-wise constant model is used,
extended to allow for Gamma heterogeneity. Three competing exits from unemployment
are accounted for; regular employment, sheltered/subsidized employment and withdrawal
from the labor force. The model is also generalized by accounting for differing search
behavior within the population.
The hazard rate is constant or slightly increasing over time, for exit to some kind
of employment. However, for exit from unemployment by leaving the labor force, the
hazard shows quite strong positive duration dependence. Men tend to be more probable
to leave unemployment for regular employment, and less probable than women to leave
the labor force. The probability of finding regular employment is smallest for workers
with psychological disabilities, while high-school or university education as well
as previous professional experience increases the hazard rate for regular employment.
The heterogeneity due to differing search behavior appears to be at least as important
as the Gamma heterogeneity. The estimated probabilities of no search for one particular
exit varies, across exits and subsamples, between 0.0 and 0.4.