These economists conclude discrimination plays only a limited role and recommend policymakers focus on other factors.
It’s axiomatic that employers view long periods of unemployment unattractive when considering a job candidate. A study by Liberty Street Economics shows just how unattractive they are, but perhaps not for the reasons that you might think.
The study found that the job-finding rate of unemployed people drops by about 50 percent during the first eight months of being unemployed. After about 10 months, the curve starts to level off and after about 15 months it flattens out, meaning that your chances of finding a job after 15 months of unemployment won’t get any worse, at least.
According to the study, less educated workers tend to have a harder time finding work in general. When the researchers ran the sample again after controlling for education, the drop in job-finding success was not quite as steep, but it was still pronounced and followed the same basic leveling pattern.
The study examines the idea that unemployment might become self-fulfilling — employers reason that if the person was a good candidate, someone else would have hired them already, so they are reluctant to spend the time on an interview. The researchers note other studies have found this effect, but conclude that this type of discrimination is not the primary reason for the difficulty of workers getting back on the payroll after time elapses.
After controlling for various factors, researchers conclude that the role of discrimination is “limited” and urge policymakers to take action focused on other causes:
There are many other potentially important drivers of why the long-term unemployed are not hired, like skill loss in unemployment or discouragement in the face of weak job prospects. Our analysis of the limited consequences of discrimination suggests focusing on policies that target these types of concerns will be more effective in combating the plight of the long-term unemployed.
Have you experienced a stretch of long-term unemployment? How did you end up finding a job? Share with us in comments below or on our Facebook page.