Labour Market Signalling and Unemployment Duration: An Empirical Analysis Using Employer-Employee Data

Anders Frederiksen (), Rikke Ibsen, Michael Rosholm and Niels Westergård-Nielsen ()

No 2132, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper tests the signalling hypothesis using detailed flow-based employer-employee data from Denmark. The primary focus is to explore how the conditions in the pre-displacement firm affect the duration of unemployment. The empirical analysis is conducted within a competing risk framework, with destinations into reemployment and inactivity, which yields more plausible estimates of the signalling effect. It is established that the positive ability signal of being displaced due to a plant closure is significant but also that the signal of displacement from severe downsizing is important. Issues that have previously been ignored in the empirical analysis of the signalling hypothesis such as local labour market conditions, the sector of employment and the duration of the previous employment match are established to be important determinants for the time spent in unemployment. The heterogeneity of the signalling effect across various employee subgroups in the economy is also explored. These findings emphasize that individuals’ reemployment prospects are heavily influenced by the labour market history and in particular by the conditions in the firms in which they were previously employed.

Keywords: plant closure; unemployment duration; signalling (search for similar items in EconPapers)
JEL-codes: J64 J65 J68 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2006-05
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - published in: Economic Letters, 2013, 118 (1), 84-86

Downloads: (external link)
https://docs.iza.org/dp2132.pdf (application/pdf)

Related works:
Journal Article: Labour market signalling and unemployment duration: An empirical analysis using employer–employee data (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp2132

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().