Work Histories and Lifetime Unemployment

Research output: Contribution to journalArticle (Academic Journal)peer-review

Abstract

A long‐standing question in economics is how important unobserved differences across workers are for explaining unemployment. I revisit this topic using variation in lifetime unemployment across workers in U.S. data. A comparison of workers often unemployed with the rest shows that although differences in job‐finding rates increase over the course of a career, differences in job‐separation rates are large right from the start. I develop a directed search model with symmetric unobserved heterogeneity, in which agents learn workers' types from their labor market histories, to rationalize these findings. The model cannot match the data if unobserved heterogeneity is neglected.
Original languageEnglish
Pages (from-to)321
Number of pages350
JournalInternational Economic Review
DOIs
Publication statusPublished - 12 Feb 2020

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