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Why Is Unemployment Duration a Sorting Criterion in Hiring?

Author

Listed:
  • Van Belle, Eva

    (University of Neuchatel)

  • Caers, Ralf

    (KU Leuven)

  • De Couck, Marijke

    (Free University of Brussels)

  • Di Stasio, Valentina

    (Utrecht University)

  • Baert, Stijn

    (Ghent University)

Abstract

Recent evidence from large-scale field experiments has shown that employers use job candidates' unemployment duration as a sorting criterion. In the present study, we investigate the mechanisms underlying this pattern. To this end, we conduct a lab experiment in which participants make hiring decisions concerning fictitious job candidates with diverging unemployment durations. In addition, these participants rate the job candidates on statements central to four theoretical mechanisms often related to the scarring effect of unemployment: general signalling theory, (perceived) skill loss, queuing theory, and rational herding. We use the resulting data to estimate a multiple mediation model, in which the effect of the duration of unemployment on hiring intentions is mediated by the four theories. The lower hiring chances of the long-term unemployed turn out to be dominantly driven by the perception of longer unemployment spells as a signal of lower motivation. Recent evidence from large-scale field experiments has shown that employers use job candidates' unemployment duration as a sorting criterion. In the present study, we investigate the mechanisms underlying this pattern. To this end, we conduct a lab experiment in which participants make hiring decisions concerning fictitious job candidates with diverging unemployment durations. In addition, these participants rate the job candidates on statements central to four theoretical mechanisms often related to the scarring effect of unemployment: general signalling theory, (perceived) skill loss, queuing theory, and rational herding. We use the resulting data to estimate a multiple mediation model, in which the effect of the duration of unemployment on hiring intentions is mediated by the four theories. The lower hiring chances of the long-term unemployed turn out to be dominantly driven by the perception of longer unemployment spells as a signal of lower motivation.

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  • 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).
    • Handle: RePEc:iza:izadps:dp10876
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    Cited by:

    1. Emmanuel Duguet & Rémi Le Gall & Yannick L’Horty & Pascale Petit, 2018. "How does labour market history influence the access to hiring interviews?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 39(4), pages 519-533, July.
    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. Eva Van Belle & Ralf Caers & Marijke De Couck & Valentina Di Stasio & Stijn Baert, 2019. "The Signal of Applying for a Job Under a Vacancy Referral Scheme," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 58(2), pages 251-274, April.
    4. Margaret Maurer-Fazio & Sili Wang, 2018. "Does marital status affect how firms interpret job applicants’ un/employment histories?," International Journal of Manpower, Emerald Group Publishing Limited, vol. 39(4), pages 567-580, July.
    5. Krug, Gerhard & Drasch, Katrin & Jungbauer-Gans, Monika, 2019. "The social stigma of unemployment : consequences of stigma consciousness on job search attitudes, behaviour and success," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 53(1), pages .11(1-27).
    6. repec:iab:iabjlr:v:53:i:1:p:art.11 is not listed on IDEAS
    7. 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.
    8. Krug, Gerhard & Drasch, Katrin & Jungbauer-Gans, Monika, 2019. "The social stigma of unemployment : consequences of stigma consciousness on job search attitudes, behaviour and success," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 53(1), pages 1-11.

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    More about this item

    Keywords

    unemployment scarring; signalling theory; queuing theory; rational herding;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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