Unemployment duration stigma and re-employment earnings

A non-stationary model of individual labour market histories where the distribution of wage offers depends on elapsed unemployment duration and where unemployment compensation is claimed for a limited period only, is estimated from sample information on completed unemployment duration, accepted earnings, and accepted job duration, and can identify movements in the reservation wages induced by human capital loss from those caused by benefit exhaustion. The results indicate that individuals seem to be much more sensitive to benefit exhaustion than human capital loss. The estimated structural parameters provide an explanation for the existence of a statistical relationship between contiguous unemployment and accepted job durations. -Author