Long-run Consequences of Ranking Job Applicants by Unemployment Duration: Theoretical and Numerical Analyses
This paper considers the long-run consequences of ranking job applicants on the basis of their unemployment durations by using a general equilibrium model in which statistical discrimination by firms against jobless workers may yield multiple stationary equilibria. Because the most inefficient equilibrium is supported by the belief that jobless workers have lost their employability, the government should dissuade firms from holding this extreme belief, thereby creating second chances for jobless workers. Moreover, by reducing the incomes of jobless workers through taxation, the government can create a new equilibrium in which job seekers can find new jobs without experiencing long-term unemployment.
|Date of creation:||Sep 2013|
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- Stefan Eriksson, 2006.
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- Stefan Eriksson & Jonas Lagerström, 2006. "Competition between Employed and Unemployed Job Applicants: Swedish Evidence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(3), pages 373-396, October.
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- Stefan Eriksson & Dan-Olof Rooth, 2014. "Do Employers Use Unemployment as a Sorting Criterion When Hiring? Evidence from a Field Experiment," American Economic Review, American Economic Association, vol. 104(3), pages 1014-1039, March.
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