Abstract

http://ssrn.com/abstract=2147097
 


 



Duration Dependence and Labor Market Conditions: Theory and Evidence from a Field Experiment


Kory Kroft


University of Toronto

Fabian Lange


McGill University

Matthew Notowidigdo


University of Chicago - Booth School of Business

September 2012

NBER Working Paper No. w18387

Abstract:     
This paper studies the role of employer behavior in generating "negative duration dependence" -- the adverse effect of a longer unemployment spell -- by sending fictitious resumes to real job postings in 100 U.S. cities. Our results indicate that the likelihood of receiving a callback for an interview significantly decreases with the length of a worker's unemployment spell, with the majority of this decline occurring during the first eight months. We explore how this effect varies with local labor market conditions, and find that duration dependence is stronger when the labor market is tighter. We develop a theoretical framework that shows how the sign of this interaction effect can be used to discern among leading models of duration dependence based on employer screening, employer ranking, and human capital depreciation. Our results suggest that employer screening plays an important role in generating duration dependence; employers use the unemployment spell length as a signal of unobserved productivity and recognize that this signal is less informative in weak labor markets.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Number of Pages in PDF File: 61

working papers series





Date posted: September 15, 2012  

Suggested Citation

Kroft, Kory and Lange, Fabian and Notowidigdo, Matthew, Duration Dependence and Labor Market Conditions: Theory and Evidence from a Field Experiment (September 2012). NBER Working Paper No. w18387. Available at SSRN: http://ssrn.com/abstract=2147097

Contact Information

Kory Kroft (Contact Author)
University of Toronto ( email )
Toronto, Ontario M5S 3G8
Canada
Fabian Lange
McGill University ( email )
1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada
Matthew Notowidigdo
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,294
Downloads: 16

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.437 seconds