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The Effects of Unemployment and Underemployment on Employment Opportunities

Author

Listed:
  • John M. Nunley
  • Adam Pugh
  • Nicholas Romero
  • R. Alan Seals

Abstract

The authors use data from a résumé audit to estimate the impact of unemployment and underemployment on the employment prospects of recent college graduates. They find no statistical evidence linking unemployment spells of different durations to employment opportunities. By contrast, college graduates who are underemployed have callback rates that are 30% lower than those of applicants who are adequately employed. The null effects associated with unemployment and the adverse effects associated with underemployment are robust across cities with relatively tight and loose labor-market conditions. Internship experience obtained while completing one’s degree substantially reduces the negative effects of underemployment. The data support the proposition that employers view underemployment as a strong signal of lower expected productivity.

Suggested Citation

  • John M. Nunley & Adam Pugh & Nicholas Romero & R. Alan Seals, 2017. "The Effects of Unemployment and Underemployment on Employment Opportunities," ILR Review, Cornell University, ILR School, vol. 70(3), pages 642-669, May.
  • Handle: RePEc:sae:ilrrev:v:70:y:2017:i:3:p:642-669
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    Citations

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    Cited by:

    1. Pierre Cahuc & Stéphane Carcillo & Andreea Minea, 2021. "The Difficult School-to-Work Transition of High School Dropouts: Evidence from a Field Experiment," Journal of Human Resources, University of Wisconsin Press, vol. 56(1), pages 159-183.
    2. Van Belle, Eva & Caers, Ralf & De Couck, Marijke & Di Stasio, Valentina & Baert, Stijn, 2017. "Why Is Unemployment Duration a Sorting Criterion in Hiring?," IZA Discussion Papers 10876, Institute of Labor Economics (IZA).
    3. Judd Kessler & Corinne Low & Colin D. Sullivan, 2019. "Incentivized Resume Rating: Eliciting Employer Preferences without Deception," Working Papers 2019-039, Human Capital and Economic Opportunity Working Group.
    4. Francisco Perez‐Arce & María J. Prados, 2021. "The Decline In The U.S. Labor Force Participation Rate: A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 35(2), pages 615-652, April.
    5. Nüß, Patrick, 2017. "Duration Dependence as an Unemployment Stigma: Evidence from a Field Experiment in Germany," GLO Discussion Paper Series 88, Global Labor Organization (GLO).
    6. Stijn Baert & Dieter Verhaest, 2019. "Unemployment or Overeducation: Which is a Worse Signal to Employers?," De Economist, Springer, vol. 167(1), pages 1-21, March.
    7. Namingit, Sheryll & Blankenau, William & Schwab, Benjamin, 2021. "Sick and tell: A field experiment analyzing the effects of an illness-related employment gap on the callback rate," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 865-882.
    8. Shushanik Margaryan & Nils Saniter & Mathias Schumann & Thomas Siedler, 2022. "Do Internships Pay Off? The Effects of Student Internships on Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 57(4), pages 1242-1275.
    9. Matthew A. Ng & Anthony Naranjo & Ann E. Schlotzhauer & Mindy K. Shoss & Nika Kartvelishvili & Matthew Bartek & Kenneth Ingraham & Alexis Rodriguez & Sara Kira Schneider & Lauren Silverlieb-Seltzer & , 2021. "Has the COVID-19 Pandemic Accelerated the Future of Work or Changed Its Course? Implications for Research and Practice," IJERPH, MDPI, vol. 18(19), pages 1-28, September.
    10. Till von Wachter, 2020. "The Persistent Effects of Initial Labor Market Conditions for Young Adults and Their Sources," Journal of Economic Perspectives, American Economic Association, vol. 34(4), pages 168-194, Fall.
    11. María Paola Sevilla & Mauricio Farías & Daniela Luengo-Aravena, 2021. "Patterns and Persistence of Educational Mismatch: A Trajectory Approach Using Chilean Panel Data," Social Sciences, MDPI, vol. 10(9), pages 1-24, September.
    12. Tamara Gutfleisch & Robin Samuel & Stefan Sacchi, 2021. "The application of factorial surveys to study recruiters’ hiring intentions: comparing designs based on hypothetical and real vacancies," Quality & Quantity: International Journal of Methodology, Springer, vol. 55(3), pages 775-804, June.
    13. Arne F. Lyshol & Plamen T. Nenov & Thea Wevelstad, 2021. "Duration Dependence and Labor Market Experience," LABOUR, CEIS, vol. 35(1), pages 105-134, March.
    14. Jaeger, David A. & Nunley, John M. & Seals Jr., R. Alan & Wilbrandt, Eric J., 2020. "The Demand for Interns," IZA Discussion Papers 12960, Institute of Labor Economics (IZA).
    15. Adermon, Adrian & Hensvik, Lena, 2022. "Gig-jobs: Stepping stones or dead ends?," Labour Economics, Elsevier, vol. 76(C).
    16. Gaddis, S. Michael, 2018. "An Introduction to Audit Studies in the Social Sciences," SocArXiv e5hfc, Center for Open Science.
    17. Soumitra Shukla, 2021. "Between College and That First Job: Designing and Evaluating Policies for Hiring Diversity," International Finance Discussion Papers 1331, Board of Governors of the Federal Reserve System (U.S.).
    18. Lulu P. Shi & Christian Imdorf & Robin Samuel & Stefan Sacchi, 2018. "How unemployment scarring affects skilled young workers: evidence from a factorial survey of Swiss recruiters," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 52(1), pages 1-15, December.
    19. David Neumark, 2018. "Experimental Research on Labor Market Discrimination," Journal of Economic Literature, American Economic Association, vol. 56(3), pages 799-866, September.
    20. Judd B. Kessler & Corinne Low & Colin Sullivan, 2019. "Incentivized Resume Rating: Eliciting Employer Preferences without Deception," NBER Working Papers 25800, National Bureau of Economic Research, Inc.
    21. Gerhard Krug & Katrin Drasch & Monika Jungbauer-Gans, 2019. "The social stigma of unemployment: consequences of stigma consciousness on job search attitudes, behaviour and success," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 53(1), pages 1-27, December.
    22. Zhanat Abzhan & Toty Bekzhanova & Anar Nukesheva & Mirzatilla Abdurakhmanov & Lyazzat Aitkhozhina & Zhanna Bulkhairova, 2020. "Peculiarities of youth unemployment: a case study," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(4), pages 3438-3454, June.
    23. Gabdelyakhat R. Latfullin & Oleg F. Gabdrakhmanov & Elena Y. Ivanova-Yakushko & Andrey V. Nazarov, 2020. "Informal Economic Networks in the Services Sector," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 156-178.
    24. Andreea Minea, 2018. "Essays on the social inclusion of young people. Family and labor market pathways," Sciences Po publications info:hdl:2441/7dun75j1019, Sciences Po.

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