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Work Histories And Lifetime Unemployment

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  • Iacopo Morchio

Abstract

A long‐standing question in economics is how important unobserved differences across workers are for explaining unemployment. I revisit this topic using variation in lifetime unemployment across workers in U.S. data. A comparison of workers often unemployed with the rest shows that although differences in job‐finding rates increase over the course of a career, differences in job‐separation rates are large right from the start. I develop a directed search model with symmetric unobserved heterogeneity, in which agents learn workers' types from their labor market histories, to rationalize these findings. The model cannot match the data if unobserved heterogeneity is neglected.

Suggested Citation

  • Iacopo Morchio, 2020. "Work Histories And Lifetime Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(1), pages 321-350, February.
    • Handle: RePEc:wly:iecrev:v:61:y:2020:i:1:p:321-350
    DOI: 10.1111/iere.12425
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    Cited by:

    1. Victoria Gregory & Guido Menzio & David Wiczer, 2020. "Pandemic Recession: L- or V-Shaped?," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 40(01), pages 1-31, May.
    2. Hie Joo Ahn & Bart Hobijn & Ayşegül Şahin, 2023. "The Dual U.S. Labor Market Uncovered," NBER Working Papers 31241, National Bureau of Economic Research, Inc.
    3. Pizzinelli, Carlo & Speigner, Bradley, 2017. "Matching efficiency and labour market heterogeneity in the United Kingdom," Bank of England working papers 667, Bank of England.
    4. Denderski, Piotr & Stoltenberg, Christian A., 2023. "On the existence of private unemployment insurance with advance information on future job losses," Journal of Public Economics, Elsevier, vol. 224(C).
    5. Häkkinen Skans, Iida & Carlsson, Mikael & Nordström Skans, Oskar, 2017. "Wage Flexibility in a Unionized Economy with Stable Wage Dispersion," Working Papers 149, National Institute of Economic Research.
    6. Robert E. Hall & Marianna Kudlyak, 2019. "Job-Finding and Job-Losing: A Comprehensive Model of Heterogeneous Individual Labor-Market Dynamics," NBER Working Papers 25625, National Bureau of Economic Research, Inc.
    7. Victoria Gregory & Guido Menzio & David G. Wiczer, 2021. "The Alpha Beta Gamma of the Labor Market," NBER Working Papers 28663, National Bureau of Economic Research, Inc.
    8. Kuhn, Moritz & Ploj, Gasper, 2020. "Job stability, earnings dynamics, and life-cycle savings," CEPR Discussion Papers 15460, C.E.P.R. Discussion Papers.
    9. Garibaldi, Pietro & Gomes, Pedro Maia, 2022. "Temporary Replacement Workers in a Matching Model with Employment at Will," IZA Discussion Papers 15503, Institute of Labor Economics (IZA).

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