Press summary

Understanding whether and when unemployment hurts job seekers’ hiring chances is a question that has generated considerable empirical attention, yet surprisingly little consensus. Individual field experiments have produced conflicting findings, leaving scholars and policymakers without a clear picture of how employers actually respond to unemployment spells of varying lengths.

In this study, we systematically review the experimental literature on unemployment and inactivity scarring in hiring and meta-analytically pool the evidence from nearly 67,000 fictitious job applications across seven countries. This approach allows us to resolve existing contradictions and pinpoint the onset of the hiring penalty with greater precision than any individual study could.

Our findings reveal a clear duration pattern. Unemployment spells of up to six months do not reduce callback rates; if anything, short-term unemployed candidates hold a slight advantage over their employed counterparts. A significant hiring penalty only emerges after approximately twelve months of unemployment and grows as the spell lengthens. Labour market conditions further moderate this effect: the penalty is more pronounced in tight labour markets, where employers are more likely to interpret an unemployment spell as a negative productivity signal rather than a reflection of broader economic circumstances. The limited evidence on inactivity suggests that inactive candidates face an even heavier penalty than the unemployed.

These findings have direct policy implications. Interventions aimed at reducing long-term unemployment – particularly job search assistance and retraining programmes – are most effective when deployed early, ideally within the first six months of a spell.