Arbeitspapier
The Consequences of Long Term Unemployment: Evidence from Matched Employer-Employee Data
It is well known that the long-term unemployed fare worse in the labor market than the short-term unemployed, but less clear why this is so. One potential explanation is that the long-term unemployed are "bad apples" who had poorer prospects from the outset of their spells (heterogeneity). Another is that their bad outcomes are a consequence of the extended unemployment they have experienced (state dependence). We use Current Population Survey (CPS) data on unemployed individuals linked to wage records for the same people to distinguish between these competing explanations. For each person in our sample, we have wage record data that cover the period from 20 quarters before to 11 quarters after the quarter in which the person is observed in the CPS. This gives us rich information about prior and subsequent work histories not available to previous researchers that we use to control for individual heterogeneity that might be affecting subsequent labor market outcomes. Even with these controls in place, we find that unemployment duration has a strongly negative effect on the likelihood of subsequent employment. This finding is inconsistent with the heterogeneity ("bad apple") explanation for why the long-term unemployed fare worse than the short-term unemployed. We also find that longer unemployment durations are associated with lower subsequent earnings, though this is mainly attributable to the long-term unemployed having a lower likelihood of subsequent employment rather than to their having lower earnings once a job is found.
- Language
-
Englisch
- Bibliographic citation
-
Series: IZA Discussion Papers ; No. 10223
- Classification
-
Wirtschaft
Unemployment: Models, Duration, Incidence, and Job Search
- Subject
-
unemployment duration
heterogeneity
state dependence
- Event
-
Geistige Schöpfung
- (who)
-
Abraham, Katharine G.
Haltiwanger, John C.
Sandusky, L. Kristin
Spletzer, James R.
- Event
-
Veröffentlichung
- (who)
-
Institute for the Study of Labor (IZA)
- (where)
-
Bonn
- (when)
-
2016
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Abraham, Katharine G.
- Haltiwanger, John C.
- Sandusky, L. Kristin
- Spletzer, James R.
- Institute for the Study of Labor (IZA)
Time of origin
- 2016
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Using Matched Employer-Employee Data to Study Labor Market Discrimination
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A matched employer-employee panel data set for Austria: 2002 - 2005
A matched employer-employee panel data set for Austria: 2002-2005
Who benefits from place-based policies? Evidence from matched employer-employee data
National origin wage differentials in France: evidence from matched employer-employee data
Who Benefits from Place-based Policies? Evidence from Matched Employer-Employee Data
Essays in the analysis of matched employer-employee data
Testing for Employee Discrimination Using Matched Employer-Employee Data: Theory and Evidence
Using Matched Employer-Employee Data to Study Labor Market Discrimination
A Matched Employer-Employee Panel Data Set for Austria: 2002-2005
Immigrant workers and farm performance: Evidence from matched employer-employee data
Wage inequality in Latin America: Learning from matched employer-employee data
A matched employer-employee panel data set for Austria: 2002-2005
A matched employer-employee panel data set for Austria: 2002 - 2005
A matched employer-employee panel data set for Austria: 2002-2005
Who benefits from place-based policies? Evidence from matched employer-employee data
National origin wage differentials in France: evidence from matched employer-employee data