Abstract
This article shows how stigma effects and discouragement counterbalance as sources of state dependence in unemployment throughout the business cycle.
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 (Citation2007), we add the time average in order to allow for a correlation between the individual-specific effects and the time-varying variables.