Stigma Effects of Nonemployment

Yoshiaki Omori

Economic Inquiry, 1997, vol. 35, issue 2, 394-416

Abstract: Do longer past spells of nonemployment cause longer future spells? If so, what is the likely cause, stigma or human capital decay? The author examines a sample of 10,245 spells of nonemployment experienced by 2,184 young men. After controlling for unobserved heterogeneity, he finds an increase in the duration of previous nonemployment lengthens the expected duration of future nonemployment. But the lower the local unemployment rate was when past nonemployment occurred, the larger is this effect. The finding supports the stigma hypothesis that workers who experience nonemployment when proportionately fewer are nonemployed are more severely stigmatized. Copyright 1997 by Oxford University Press.

Date: 1997
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