This paper estimates the causal effect of long-term unemployment on wages. Job search theory implies that if … Unemployment Insurance (UI) extensions do not affect wages conditional on the month of unemployment exit, then reservation wages do … not bind on average. Then, UI extensions affect mean wages only through unemployment durations and are valid instrumental …

We present evidence for a highly significant interaction between state dependence in individual unemployment risk and … high unemployment and larger in times of low unemployment. This is consistent with the existence of stigma effects in the … sense that unemployed individuals face difficulties finding a new job because employers interpret unemployment as a negative …

The social costs of unemployment, in terms of unemployment's impact on European citizens' life satisfaction, relate … strongly to unemployment duration. At any level of general joblessness, reducing long-term unemployment is more important than … reducing the number of people unemployed at any point in time. -- unemployment ; unemployment duration ; life satisfaction …