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Discussion Paper
Job Seekers’ Beliefs and the Causes of Long-Term Unemployment
In addition to its terrible human toll, the COVID-19 pandemic has also caused massive disruption in labor markets. In the United States alone, more than 25 million people lost their jobs during the first wave of the pandemic. While many have returned to work since then, a large number have remained unemployed for a prolonged period of time. The number of long-term unemployed (defined as those jobless for twenty-seven weeks or longer) has surged from 1.1 million to almost 4 million. An important concern is that the long-term unemployed face worse employment prospects, but prior work has ...
Working Paper
Estimating Duration Dependence on Re-employment Wages When Reservation Wages Are Binding
This paper documents a novel finding indicating that re-employment wages are elastic to the level of unemployment insurance (i.e., a binding reservation wage) and adapts the IV estimator for duration dependence in Schmieder et al. (2016) to account for this fact. Using administrative data from Spain, we find that unemployed workers lower their re-employment wages by 3 percent immediately after the exhaustion of unemployment insurance (UI) benefits. Workers’ characteristics and permanent unobserved heterogeneity cannot explain this. To estimate duration dependence, we extend the IV framework ...
Working Paper
Heterogeneity and Unemployment Dynamics
This paper develops new estimates of flows into and out of unemployment that allow for unobserved heterogeneity across workers as well as direct effects of unemployment duration on unemployment-exit probabilities. Unlike any previous paper in this literature, we develop a complete dynamic statistical model that allows us to measure the contribution of different shocks to the short-run, medium-run, and long-run variance of unemployment as well as to specific historical episodes. We find that changes in the inflows of newly unemployed are the key driver of economic recessions and identify an ...
Working Paper
Recall and unemployment
Using data from the Survey of Income and Program Participation (SIPP) covering 1990-2011, we document that a surprisingly large number of workers return to their previous employer after a jobless spell and experience more favorable labor market outcomes than job switchers. Over 40% of all workers separating into unemployment regain employment at their previous employer; over a fifth of them are permanently separated workers who did not have any expectation of recall, unlike those on temporary layoff. Recalls are associated with much shorter unemployment duration and better wage changes. ...
Working Paper
The Short and the Long of It: Stock-Flow Matching in the US Housing Market
This paper investigates the US housing market from just before the Great Recession onward (2006–19) and assesses the viability of stock-flow matching in generating the observed outcomes. The paper documents that the probability that a house sells declines sharply after listing for two weeks. Moreover, the probability and associated price of a fast sale recover from the housing slump sooner, faster, and more prominently than slower sales. The simulated stock-flow matching model can mimic not only sales, prices, listings, and time-on-market but also capture the distinctions in quick and ...