Statistical Discrimination and Duration Dependence in the Job Finding Rate

Gregor Jarosch and Laura Pilossoph

The Review of Economic Studies, 2019, vol. 86, issue 4, 1631-1665

Abstract: This article models a frictional labour market where employers endogenously discriminate against the long-term unemployed. The estimated model replicates recent experimental evidence which documents that interview invitations for observationally equivalent workers fall sharply as unemployment duration progresses. We use the model to quantitatively assess the consequences of such employer behaviour for job finding rates and long-term unemployment and find only modest effects given the large decline in callbacks. Interviews lost to duration impact individual job finding rates solely if they would have led to jobs. We show that such instances are rare when firms discriminate in anticipation of an ultimately unsuccessful application. Discrimination in callbacks is thus largely a response to dynamic selection, with limited consequences for structural duration dependence and long-term unemployment.

Keywords: Duration dependence; Discrimination; Long-term unemployment (search for similar items in EconPapers)
JEL-codes: E24 J64 J7 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (30)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:86:y:2019:i:4:p:1631-1665.

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