Learned Helplessness, Discouraged Workers, and Multiple Unemployment Equilibria in a Search Model
Unemployment varies strongly between countries with comparable economic structure. Some economists have tried to explain these differences with institutional differences in the labour market. Instead, this paper focuses on a model with multiple equilibria so that the same socioeconomic structure can give rise to different levels of unemployment. Unemployed workers' search efficiency are modelled within an equilibrium search model and lay behind these results. In the model learned helplessness causes a pro-cyclical behavior of the aggregate search efficiency, also known as the discouraged worker effect. The model can distinguish between locally stable and unstable labour market equilibria. The analysis shows that if a shock in an antecedent variable brings unemployment above the unstable equilibrium, the economy will eventually stabilize in a state with an even higher level of unemployment. However, a shock that brings the variable back at its initial level will not be enough to bring unemployment back at the lower equilibrium. Hence, the model also offers an explanation of why unemployment seems to move more easily up than down.
|Date of creation:||Aug 2001|
|Date of revision:|
|Contact details of provider:|| Postal: P.O.Box 8131 Dep, N-0033 Oslo, Norway|
Phone: (+47) 21 09 00 00
Fax: (+47) 21 09 49 73
Web page: http://www.ssb.no/en/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Goldsmith, Arthur H. & Veum, Jonathan R. & Darity, William Jr., 1996. "The psychological impact of unemployment and joblessness," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 25(3), pages 333-358.
- Petrongolo, Barbara, 1999.
"Re-Employment Probabilities and Returns to Matching,"
CEPR Discussion Papers
2266, C.E.P.R. Discussion Papers.
- Petrongolo, Barbara, 2001. "Reemployment Probabilities and Returns to Matching," Journal of Labor Economics, University of Chicago Press, vol. 19(3), pages 716-41, July.
- Barbara Petrongolo, 1998. "Re-employment Probabilities and Returns to Matching," CEP Discussion Papers dp0406, Centre for Economic Performance, LSE.
- Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-33, December.
- Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
- Manning, Alan, 1991.
"Multiple Equilibria in the British Labour Market: Some Empirical Evidence,"
CEPR Discussion Papers
540, C.E.P.R. Discussion Papers.
- Manning, Alan, 1992. "Multiple equilibria in the British labour market : Some empirical evidence," European Economic Review, Elsevier, vol. 36(7), pages 1333-1365, October.
- Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-32, March.
- Layard, Richard & Bean, Charles, 1989.
" Why Does Unemployment Persist?,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 91(2), pages 371-96.
- Diamond, Peter A, 1982.
"Aggregate Demand Management in Search Equilibrium,"
Journal of Political Economy,
University of Chicago Press, vol. 90(5), pages 881-94, October.
- David G. Blanchflower & Andrew J. Oswald, 2000.
"Well-Being Over Time in Britain and the USA,"
NBER Working Papers
7487, National Bureau of Economic Research, Inc.
- Blanchflower, David G. & Oswald, Andrew J., 2001. "Well-Being Over Time in Britain and the USA," The Warwick Economics Research Paper Series (TWERPS) 616, University of Warwick, Department of Economics.
- Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, vol. 72(5), pages 968-79, December.
- Benati, Luca, 2001. "Some empirical evidence on the 'discouraged worker' effect," Economics Letters, Elsevier, vol. 70(3), pages 387-395, March.
- William A. Darity & Arthur H. Goldsmith, 1996. "Social Psychology, Unemployment and Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 121-140, Winter.
- Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
- Baum, Andrew & Fleming, Raymond & Reddy, Diane M., 1986. "Unemployment stress: Loss of control, reactance and learned helplessness," Social Science & Medicine, Elsevier, vol. 22(5), pages 509-516, January.
- Johnson, G.E. & Layard, P.R.G., 1987. "The natural rate of unemployment: Explanation and policy," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 16, pages 921-999 Elsevier.
- Gilles Saint-Paul, 1995. "The High Unemployment Trap," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 527-550.
- Platt, Stephen, 1984. "Unemployment and suicidal behaviour: A review of the literature," Social Science & Medicine, Elsevier, vol. 19(2), pages 93-115, January.
- Weitzman, Martin L, 1982. "Increasing Returns and the Foundations of Unemployment Theory," Economic Journal, Royal Economic Society, vol. 92(368), pages 787-804, December.
- Mortensen, Dale T, 1999. "Equilibrium Unemployment Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 889-914, November.
- Mortensen, Dale T, 1989.
" The Persistence and Indeterminancy of Unemployment in Search Equilibrium,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 91(2), pages 347-70.
- Dale T. Mortensen, 1988. "The Persistence and Indeterminacy of Unemployment in Search Equilibrium," Discussion Papers 810, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Coles, Melvyn & Masters, Adrian, 2000. "Retraining and long-term unemployment in a model of unlearning by not doing," European Economic Review, Elsevier, vol. 44(9), pages 1801-1822, October.
- Manning, Alan, 1990. "Imperfect Competition, Multiple Equilibria and Unemployment Policy," Economic Journal, Royal Economic Society, vol. 100(400), pages 151-62, Supplemen.
- Goldsmith, Arthur H. & Veum, Jonathan R. & William Darity, Jr., 1996. "The impact of labor force history on self-esteem and its component parts, anxiety, alienation and depression," Journal of Economic Psychology, Elsevier, vol. 17(2), pages 183-220, April.
- Erik SCHOKKAERT & Luc VAN OOTEGEM, 1990. "Sen's Concept of the Living Standard applied to the Belgian Unemployed," Discussion Papers (REL - Recherches Economiques de Louvain) 1990039, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:303. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (J Bruusgaard)
If references are entirely missing, you can add them using this form.