Unemployment dynamics in the greek labour market

PhD Thesis
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The main purpose of this thesis is to analyze the dynamics of the Greek labour market by calculating worker flows and their corresponding transition probabilities between the three main statuses of economic activity: employment, unemployment and inactivity. For this purpose, micro-data were drawn from the Greek Quarterly Labour Force Survey for the 1999-2013 period. The main objectives of this thesis are: a) the detailed description of the Greek labour market for the 1999-2013 period which focuses on the unemployment rate in the total population and various demographic groups, b) the thorough examination of the size, the evolution and the cyclicality of worker flows, c) the unemployment decomposition into two parts: the inflow rate and the outflow rate, d) the investigation of the determinants of individual labour market transitions between employment, unemployment and inactivity by applying multinomial logit specifications and e) the investigation of the trend and composition of long-term unemployment as well as the determinants of long-term unemployment by estimating logistic regressions. The main findings of this thesis show that the Greek labour market is characterized by an unprecedented high unemployment rate which reached 27.8% in the second quarter of 2013 and a dramatically high proportion of long-term unemployment which reached the 66.8% mark. The job-finding probability dropped significantly from 26% in the pre-crisis period to 10.3% in the second quarter of 2013. Both the inflow and the outflow rates are also important factors in explaining unemployment fluctuations. At the beginning of the recession, the inflow rate prevails while the outflow rate dominates in later phases of the recession. The transition probability from employment to unemployment is higher for females, people aged 15-24 and 25-34, the primary educated, singles, those who worked in construction-mining-quarrying industry and employees. The transition probability from unemployment to employment is greater for males, individuals aged 15-24 and 25-34, tertiary education holders and foreigns. Finally, females, unemployed aged 45 or over, primary education holders, singles, those without previous employment experience and those who stop their job due to resignation are more exposed to the risk of long-term unemployment.