Do Employers Use Unemployment as a Sorting Criterion When Hiring? Evidence from a Field Experiment
AbstractThe 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.
CitationEriksson, 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
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
- J23 Labor Demand
- J64 Unemployment: Models, Duration, Incidence, and Job Search
- J71 Labor Discrimination