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Unemployment as a Sorting Criterion Essay (Article)

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Updated: Aug 31st, 2020

Empirical Work

Eriksson and Rooth developed an empirical study to evaluate the effect of the unemployment period and the level of employment stigma in the labor market. The main focus of the study is to develop a clear understanding of the attitudes associated with employers when contracting employees facing different periods of unemployment. It is apparent that the rate of unemployment in the society has been on a fluctuating trend over the past decades, and there is an indication that there is a rise in the coefficient of long-term unemployment (Erikson and Rooth 1015).

Additionally, the empirical study reveals that the current labor market has demonstrated an increase in stigmatization in employment, especially for individuals with more than nine months of unemployment functions. It is apparent that most employers are keen on analyzing the information about the past employment of job applicants, and this study reveals that there is a high likelihood of stigmatization for applicants with long-term experience with unemployment.

Methodology

The researchers developed a study to evaluate the relationship between the length of unemployment and the stigmatization attitude associated with employers when they handle the affected job applicants. The descriptive study relied on both primary and secondary data. The secondary data was retrieved from various studies from the past through a theoretical analysis process that revealed the findings from other researchers. The primary data was retrieved from an experimental process. The experiment entailed the collection of job applications in the Swedish labor market in selected jobs. The researcher considered 8,466 applications sent out to 3,786 employers (Erikson and Rooth 1019).

The large sample space provided a clear representation of the entire labor market to enhance the validity and reliability of the findings. The applications were designed to possess realistic attributes of job seekers with different levels of experience and unemployment periods. The attribute under consideration was the unemployment history, but it was not highlighted explicitly. The analysis process entailed the evaluation of the likelihood of the applicants being invited for a job interview based on the length and number of unemployment spells.

Identification and Estimation Strategy

The researchers had full control of the attributes of the applicants, and they were assigned randomly. The unemployment history attribute was estimated in a manner that would provide a realistic picture of the virtual applicants. The contemporary unemployment group involved estimation of between 0-9 months of unemployment. The applications also included graduates who had been unemployed for a year, and other applicants with varying numbers of unemployment spells, and different numbers of employees ranging from 1-3 employees. The main reason for having limits in the estimation process was to ensure that the attributes possessed by the respective applicants could be included in the analysis process.

One of the limitations of the identification and estimation strategy is that it did not provide a clear indication that the gaps in the employment experience skills were caused by unemployment; hence, it is possible that the recipients of the CVs would have assumed that the gaps were caused by other reasons. The baseline equation was estimated by determining the invitation of a job interview as a function of the standard deviation of the job advertisement attributes (Erikson and Rooth 1028).

Findings

The researchers found that the callback probability is a function of the unemployment history of the applicants. The higher the coefficient of unemployment spells the lower the probability of callback from the employers. Additionally, the frequency of the unemployment spells is also a major determinant of the callback function. The researchers clearly revealed that unemployment stigmatization exists in the labor market (Eriksson and Rooth 1036).

However, the results also revealed that other factors like skill levels and experience have an effect on the decisions made by employers. The research reveals that people with a long spell of unemployment before applying for a job have a lower probability of being called for an interview, especially if the job opportunity is a high-skill level opportunity. This implies that the employers associate the long unemployment spells with the erosion or lack of skills (Solga 160).

It is also apparent that job applicants with a long list of past employers experience a hard time getting a new job because in callback function is relatively lower, especially if the applicants have longer periods of unemployment between jobs (Karren and Sherman 849). The study validated the fact that employers look beyond the skills and experience possessed by the employees. The unemployment stigmatization is a concept that should be studied further to help in the development of an understanding of the factors that enhance the chances of getting a job for the unemployed members of society.

Works Cited

Carvalho, L., Stephan Meier, and Stephanie W. Wang. “Poverty and Economic Decision-Making: Evidence from Changes In Financial Resources At Payday.” American Economic Review 106.2 (2016): 260-284. Print.

Eriksson, Stefan, and Dan-Olof Rooth. “Do Employers Use Unemployment as a Sorting Criterion When Hiring? Evidence from a Field Experiment.” The American Economic Review 104.3 (2014): 1014-1039. Print.

Howlett, Elizabeth, Jeremy Kees, and Elyria Kemp. “The Role of Self‐Regulation, Future Orientation, and Financial Knowledge in Long‐Term Financial Decisions.” Journal of Consumer Affairs 42.2 (2008): 223-242. Print.

Karren, Ronald, and Kim Sherman. “Layoffs and Unemployment Discrimination: A New Stigma.” Journal of Managerial Psychology 27.8 (2012): 848-863. Print.

Shah, Anuj K., Sendhil Mullainathan, and Eldar Shafir. “Some Consequences of Having Too Little.” Science 338.6107 (2012): 682-685. Print.

Solga, Heike. “‘Stigmatization by Negative Selection’: Explaining Less‐Educated People’s Decreasing Employment Opportunities.” European sociological review 18.2 (2002): 159-178. Print.

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IvyPanda. "Unemployment as a Sorting Criterion." August 31, 2020. https://ivypanda.com/essays/unemployment-as-a-sorting-criterion/.

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IvyPanda. 2020. "Unemployment as a Sorting Criterion." August 31, 2020. https://ivypanda.com/essays/unemployment-as-a-sorting-criterion/.

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IvyPanda. (2020) 'Unemployment as a Sorting Criterion'. 31 August.

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