Explaining the Employability Gap of Short-term and Long-term Unemployed Persons

This paper analyzes the determinants of employability differences between short-term and long-term unemployed persons. Knowing these differences could help to address active labor market policy programs more adequately to the needs of the job-seekers in order to increase employment integration. Based on merged survey and register data differences in job finding chances of these groups are decomposed into a part due to differences in attributes and a part due to differences in valuing the attributes. The estimates clarify that current active labor market programs do not address important factors of employment. Particularly, health of the job seekers, limitations in the working ability and obstacles to employment comprising substance abuse, financial debts or care obligations for children or frail elderly play a significant role for successful placement. The conclusion is that policy makers should integrate these aspects in the placement process.