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Unemployment persistence: How important are non-cognitive skills?

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  • Cuesta, Maite Blázquez
  • Budría, Santiago

Abstract

Using the 2000–2013 waves of the German SOEP, this paper shows that non-cognitive skills have a predictive power on unemployment transitions. The econometric approach is based on a dynamic random effects probit model that takes account of the unobserved individual heterogeneity and the state dependence that surrounds unemployment transitions. The estimation results show that the risk of unemployment depends positively on Agreeableness and External LOC, and negatively on Conscientiousness and Positive Reciprocity. These findings apply to men and women alike. Moreover, we find that the extent of unemployment state dependence also depends on specific traits, namely Openness, Positive reciprocity and External LOC. These results suggest that public policies aimed at preventing unemployment should give more importance to the moderating role of non-cognitive skills.

Suggested Citation

  • Cuesta, Maite Blázquez & Budría, Santiago, 2017. "Unemployment persistence: How important are non-cognitive skills?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 29-37.
    • Handle: RePEc:eee:soceco:v:69:y:2017:i:c:p:29-37
    DOI: 10.1016/j.socec.2017.05.006
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    More about this item

    Keywords

    Non-cognitive skills; Dynamic random effects model; Unemployment persistence;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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