Long-Term unemployment flows

Abstract

This article presents the methodology to extend the traditional employment-unemployment flows model with a third sector: long-term unemployment. This enables a new range of decompositions of various labour market aggregates which allows for a deeper understanding of the structure and dynamics of a particular labour market. One of possible analyses is conducted in the case of selected EU Member States. Finally, it is shown that transition probabilities into and from long-term unemployment depend on the business cycle in most EU countries.