Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/302658 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 17141
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Policymakers' push for higher employment rates requires the activation of long-term unemployed jobseekers and inactive persons. However, stigma related to unemployment or inactivity can hinder their hiring chances when applying for a job. This systematic literature review investigates whether, when, and why periods of not working are penalised in hiring. Our review confirms that employers generally treat the unemployed and inactive less favourably than their employed counterparts. A meta-regression analysis of transnational experimental data points to heterogeneity by the duration of being out of work: short-term unemployment of up to six months positively affects hiring prospects, while the adverse effects of unemployment scarring become noticeable after about twelve months. We highlight evidence for signalling mechanisms underlying this pattern: immediate availability offsets the negative signals in short spells, whereas expectations about reduced productivity primarily drive the negative impact of longer spells. The latter negative signal is more pronounced when unemployment rates are low.
Subjects: 
systematic review
hiring chances
inactivity
unemployment
meta-analysis
JEL: 
E24
J24
J64
Document Type: 
Working Paper

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