Cyclers, Stayers and LeaversHow Does Unemployment Contribute to Welfare Dynamics?

Resumen

The main aim of this paper is to analyse the contribution of unemployment and individual characteristics to welfare duration taking into account an alternative modelling of unemployment and including heterogeneity according to participation sequences. The programme studied in this paper is the Minimum Income Integration programme (IMI) of the Madrid Government. A flexible semi-parametric proportional hazard model of duration has been estimated considering the unemployment rate when entering the programme and a vector of individual characteristics. The results point towards the existence of clearly differentiated types of recipients depending on the recurrence and duration of participation: stayers, leavers and cyclers. The unemployment rate at the moment of entering the programme seems to be a relevant factor, but having less weight than that the recipients� socio-demographic characteristics. However, the combination of macroeconomic and individual factors differs notably among the three groups previously defined. The broadening of the analytical model taking into account some variables� possible interactions with time also shows that the effect of macroeconomic conditions at entry into the programme is relevant, but its direction changes over time. Something similar occurs with some socio-demographic variables.