The Consequences of Long Term Unemployment: Evidence from Matched Employer-Employee Data
Katharine Abraham (),
Kristin Sandusky and
James Spletzer ()
No 22665, NBER Working Papers from National Bureau of Economic Research, Inc
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 these bad outcomes are a consequence of their extended unemployment (state dependence). We use Current Population Survey data on unemployed individuals linked to wage records for the same people to distinguish between these explanations. The rich information on work histories provided by the wage records allows us to control for individual heterogeneity that could be affecting post-unemployment 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 “bad apple” (heterogeneity) 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.
JEL-codes: E24 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-mac
Note: EFG LS
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (11) Track citations by RSS feed
Downloads: (external link)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
Working Paper: The Consequences of Long Term Unemployment: Evidence from Matched Employer-Employee Data* (2016)
Working Paper: The Consequences of Long Term Unemployment: Evidence from Matched Employer-Employee Data (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:22665
Ordering information: This working paper can be ordered from
The price is Paper copy available by mail.
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Series data maintained by ().