Fewer employer contacts for unemployed persons
The study analyzes a large number of job applicants’ contacts with companies. If the information the prospective employer has access to makes it clear that the applicant is unemployed, then the chances of that applicant being contacted are seven percent lower for the average applicant than for a working applicant who is identical in all other respects. If an unemployed applicant is nevertheless contacted, he or she will also have fewer contacts than an otherwise identical applicant who has a job. Both of these findings indicate that Swedish employers view the fact that an applicant is out of work as a negative characteristic.
It is important to study empirically how companies perceive unemployed and working applicants respectively. Economic theory points out that it is often better for companies to employ individuals who are already working than people who are out of work, which can have a considerable impact on social economy. The preference for employing those who already have jobs can lead to a higher so-called equilibrium unemployment level, and entails a lengthier period for regaining equilibrium after a disturbance. This can be an important explanation for developments in unemployment in Sweden in the 1990s.
The data used come from the Swedish Labor Market Administration’s Applicant Bank, which contains information that job seekers, both unemployed and employed ones, have submitted about their education, work experience, wishes regarding employment, etc. Since researchers have access to exactly the same information about job applicants as employers have, it is possible to isolate the effect of being unemployed on the likelihood of being contacted by a company. The aim of the study is to elucidate whether unemployment as such reduces an applicant’s chance of being offered a job. The title of the report is “Competition between employed and unemployed job applicants: Swedish evidence” and it was written by Stefan Eriksson and Jonas Lagerström.