Variation in unemployment scarring across labor markets. A comparative factorial survey experiment using real vacancies

Abstract

Unemployment may severely impede access to (good) jobs. We focus on the effects of unemployment scarring on the chances of young workers to get hired and evaluate the extent to which they are affected in labor markets with different levels of unemployment. Drawing on Goffman’s work on stigmatization and on queuing theory, we derive two potentially complementary micro-level explanations with opposing macro-level implication. We address the variation in unemployment scarring across 20 labor markets in four European countries based on factorial survey experiments embedded in real hiring situations. The results suggest that in labor markets with persistently low levels of unemployment, stigmatization, as proposed by Goffman, is the main source of unemployment scarring. We find no evidence that unemployment scarring is weaker when unemployment and the number of job seekers are low, as we inferred from queuing approaches. Our study contributes to expanding knowledge of context variability in unemployment scarring.