On the effects of ranking by unemployment duration
Preugschat, Edgar (Technical University of Dortmund)
Fernández-Blanco, Javier (Universitat Autònoma de Barcelona)

Date:	2018
Abstract:	We propose a theory based on the firm's hiring behavior that rationalizes the observed significant decline of callback rates for an interview and exit rates from unemployment and the mild decline of reemployment wages over unemployment duration. We build a directed search model with symmetric incomplete information on worker types and non-sequential search by firms. Sorting due to firms' testing of applicants in the past makes expected productivity fall with duration, which induces firms to rank applicants by duration. In equilibrium callback and exit rates both fall with unemployment duration. In our numerical exercise using U. S. data we show that our model can replicate quite well the observed falling patterns, with the firm's ranking decision accounting for a sizable part.
Grants:	Ministerio de Ciencia y Tecnología ECO 2010-19357 Ministerio de Ciencia y Tecnología ECO 2013-46395 Ministerio de Economía y Competitividad SEV-2015-0563
Note:	Altres ajuts: DFG/SPP/1764
Rights:	Tots els drets reservats.
Language:	Anglès
Document:	Article ; recerca ; Versió acceptada per publicar
Subject:	Ranking ; Sorting ; Directed search ; Exit rates ; Wages ; Unemployment duration
Published in:	European economic review, Vol. 104 (2018) , p. 92-110, ISSN 0014-2921

DOI: 10.1016/j.euroecorev.2018.02.003

Postprint 39 p, 495.9 KB

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