Unemployment duration, job search and labour market segmentation.  Evidence from urban Ethiopia

Although it is a common theoretical assumption that the chances to find a job fall with time in unmeployment, this is not systematically confirmed by empirical evidence, and there is no evidence for developing countries.  We develop a farmework that allows us to test the four major explanations why we may observe non-negative duration dependence while genuine duration dependence is negative: financial support for the unemployed, active labour market policies, a change in the economy over time, and segmentation of the labour market into 'good' and 'bad' jobs.  Using data for urban Ethiopia we observe a constant hazard while controlling for unobserved heterogeneity, and find that labour market segmentation is the only convincing explanation.