Unemployment persistence: not only stigma but discouragement too

Abstract

This article shows how stigma effects and discouragement counterbalance as sources of state dependence in unemployment throughout the business cycle.

Keywords:

• state dependence in unemployment
• stigma effects
• discouragement
• Spain

JEL Classification:

• J64
• C23

Acknowledgements

Financial support is greatly acknowledged from the Spanish project ECO2010-21668-C03-02 and XREPP (Direcció General de Recerca).

Notes

¹ For the remainder of this article, we refer to genuine state dependence when describing state dependence.

² We do not know of any other annual panel that is longer and includes the variables needed for our analysis (namely discouragement).

³ Note that this question is answered by anyone in the survey who is looking for a job regardless of their activity status.

⁴ Following Stewart (2007), we add the time average in order to allow for a correlation between the individual-specific effects and the time-varying variables.