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Job Seekers’ Beliefs and the Causes of Long-Term Unemployment

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Abstract

In addition to its terrible human toll, the COVID-19 pandemic has also caused massive disruption in labor markets. In the United States alone, more than 25 million people lost their jobs during the first wave of the pandemic. While many have returned to work since then, a large number have remained unemployed for a prolonged period of time. The number of long-term unemployed (defined as those jobless for twenty-seven weeks or longer) has surged from 1.1 million to almost 4 million. An important concern is that the long-term unemployed face worse employment prospects, but prior work has provided no consensus on what drives this decline in employment prospects. This post discusses new findings using data on elicited beliefs of unemployed job seekers to uncover the forces driving long-term unemployment.

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  • Andreas I. Mueller & Johannes Spinnewijn & Giorgio Topa, 2021. "Job Seekers’ Beliefs and the Causes of Long-Term Unemployment," Liberty Street Economics 20210129, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:89597
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    More about this item

    Keywords

    job finding expectations; long-term unemployment; duration dependence;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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