The Determinants of Duration Dependence: Labour Market Conditions and Employer Beliefs

Speaker: Dr Arianna Gatta

Affiliation: The University of Queensland

Location: Level 6 Boardroom (629), Colin Clark Building (#39), St Lucia Campus

Zoom: https://uqz.zoom.us/j/82603079317

Abstract: We test three explanations for duration dependence: skills depreciation, rational herding, and we introduce the deviance hypothesis. We do this through a field experiment in Italy where we randomized unemployment spells on fictitious resumes. In contrast with rational herding and skills depreciation models, we do not find evidence of duration dependence on average. This holds even when unemployment is low, and employers or job seekers emphasize hard skills. Yet employers who value motivation are 37% less likely to call long-term unemployed candidates and 65% less likely to call those who provide a motivation statement, supporting the deviance hypothesis.