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American Economic Review: Vol. 104 No. 3 (March 2014)

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Do Employers Use Unemployment as a Sorting Criterion When Hiring? Evidence from a Field Experiment

Article Citation

Eriksson, Stefan, and Dan-Olof Rooth. 2014. "Do Employers Use Unemployment as a Sorting Criterion When Hiring? Evidence from a Field Experiment." American Economic Review, 104(3): 1014-39.

DOI: 10.1257/aer.104.3.1014

Abstract

The stigma associated with long-term unemployment spells could create large inefficiencies in labor markets. While the existing literature points toward large stigma effects, it has proven difficult to estimate causal relationships. Using data from a field experiment, we find that long-term unemployment spells in the past do not matter for employers' hiring decisions, suggesting that subsequent work experience eliminate this negative signal. Nor do employers treat contemporary short-term unemployment spells differently, suggesting that they understand that worker/firm matching takes time. However, employers attach a negative value to contemporary unemployment spells lasting at least nine months, providing evidence of stigma effects.

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Online Appendix (159.69 KB) | Download Data Set (96.48 KB) | Author Disclosure Statement(s) (305.23 KB)

Authors

Eriksson, Stefan (Uppsala U)
Rooth, Dan-Olof (Centre for Labour Market and Discrimination Studies, Linnaeus U and Centre for Economic Demography, Lund U)

JEL Classifications

E24: Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
J23: Labor Demand
J64: Unemployment: Models, Duration, Incidence, and Job Search
J71: Labor Discrimination


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