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

Stefan Eriksson, Dan-Olof Rooth

Research output: Contribution to journalArticlepeer-review

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 eliminates 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.
Original languageEnglish
Pages (from-to)1014-1039
JournalThe American Economic Review
Volume104
Issue number3
DOIs
Publication statusPublished - 2014

Subject classification (UKÄ)

  • Economic History

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