Discussion Papers No. 303, August 2001
Statistics Norway, Research Department
Roger Bjørnstad
Learned Helplessness,
Discouraged Workers, and
Multiple Unemployment
Equilibria in a Search Model
Abstract:
Unemployment varies strongly between countries with comparable economic structure.
Some economists have tried to explain these differences with institutional differences in the
labour market. Instead, this paper focuses on a model with multiple equilibria so that the
same socioeconomic structure can give rise to different levels of unemployment.
Unemployed workers' search efficiency are modelled within an equilibrium search model and
lay behind these results. In the model learned helplessness causes a pro-cyclical behavior
of the aggregate search efficiency, also known as the discouraged worker effect. The model
can distinguish between locally stable and unstable labour market equilibria. The analysis
shows that if a shock in an antecedent variable brings unemployment above the unstable
equilibrium, the economy will eventually stabilize in a state with an even higher level of
unemployment. However, a shock that brings the variable back at its initial level will not be
enough to bring unemployment back at the lower equilibrium. Hence, the model also offers
an explanation of why unemployment seems to move more easily up than down.
Keywords: Learned helplessness, discouraged workers, multiple unemployment equilibria,
search effectiveness, long term unemployment
JEL classification: J64, E24
Address: Roger Bjørnstad, Statistics Norway, Research Department, P.O.B. 8131 Dep, N0033 Oslo, Norway. E-mail: roger.bjornstad @ssb.no
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44
Matches
Separations
ut-1
u2*
u1*
u3*
C
ut
σΗ
σ
u3*
σ/
u2*
B
u1*
A
D
45°
ut-1
u1*
u2*
u3*
σ
B
σ+
C
σ
σ/
A
D
ut-1
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53
Recent publications in the series Discussion Papers
213
M. Søberg (1998): “EPA’s New Emissions Trading
Mechanism: A Laboratory Evaluation” – A Comment
214
215
216
217
236
K. Nyborg (1998): Non-Verifiable Emissions, Voluntary
Agreements, and Emission Taxes
K. Ibenholt (1998): Material Accounting in a
Macroeconomic Framework. Forecast of waste generated
in manufacturing industries in Norway
237
H. C. Bjørnland (1998): Economic Fluctuations in a
Small Open Economy - Real versus Nominal Stocks
K-G. Lindquist (1998): The Response by the Norwegian
Aluminium Industry to Changing Market Structure
238
L.C. Zhang (1998): Post-Stratification and Calibration –
A Synthesis
J.K. Dagsvik, A.S. Flaatten and H. Brunborg: A
Behavioral Two-Sex Model
239
K.A. Brekke, R.B. Howarth and K. Nyborg (1998): Are
there Social Limits to Growth?
240
R. B. Howarth and K. A. Brekke (1998): Status
Preferences and Economic Growth
241
H. Medin, K. Nyborg and I. Bateman (1998): The
Assumption of Equal Marginal Utility of Income: How
Much Does it Matter?
R. Aaberge and Y. Zhu: The Pattern of Household
Savings during a Hyperinflation. The Case of Urban
China in the Late 1980s
218
L.C. Zhang (1998): A Note on Post-stratification when
Analyzing Binary Survey Data Subject to Non-response
219
T.J. Klette and J. Møen (1998): From Growth Theory to
Technology Policy – Coordination Problems in Theory
and Practice
242
L.C. Zhang (1998): Synthetic Graphical Modelling of
Binary Panel Data Subject to Non-response. A Case
Study
B. Bye (1998): Labour Market Rigidities and
Environmental Tax Reforms: Welfare Effects of
Different Regimes
243
B.E. Naug (1999): Modelling the Demand for Imports
and Domestic Output
220
221
J.K. Dagsvik (1998): Choice among Lotteries when
Preferences are Stochastic
244
J. Sexton and A. R. Swensen (1999): ECM-algorithms
that converge at the rate of EM
222
J.K. Dagsvik (1998): Nonparametric Identification of
Discrete Choice Models
245
E. Berg, S. Kverndokk and K.E. Rosendahl (1999):
Optimal Oil Exploration under Climate Treaties
223
L. Brubakk and J.K. Dagsvik (1998): Consumer
Demand and Unobservable Product Attributes
246
J.K. Dagsvik and B.H. Vatne (1999): Is the Distribution
of Income Compatible with a Stable Distribution?
224
E. Holmøy (1998): Potential Aggregate Gains from
Improved Sectoral Efficiency: General Equilibrium
Estimates for Norway
247
R. Johansen and J.K. Dagsvik (1999): The Dynamics of
a Behavioral Two-Sex Demographic Model
248
225
B.H. Vatne and J.K. Dagsvik (1998): Estimation of
Generalized Extreme Value Models by a Max-spectral
Representation
M. Søberg (1999): Asymmetric information and
international tradable quota treaties. An experimental
evaluation
249
226
I. Svendsen (1998): Rational Expectations in Price
Setting – Tests Based on Norwegian Export Prices
S. Grepperud, H. Wiig and F.A. Aune (1999): Maize
Trade Liberalization vs. Fertilizer Subsidies in Tanzania:
A CGE Model Analysis with Endogenous Soil Fertility
227
K.A. Brekke and R.B. Howarth (1998): The Social
Contingency of Wants: Implications for Growth and the
Environment
250
228
K.A. Brekke and E. Moxnes (1998): Do Models Improve
Fishery Management? Empirical Evidence from a
Experimental Study
K.A. Brekke and Nils Chr. Stenseth (1999): A BioEconomic Approach to the study of Pastoralism, Famine
and Cycles. Changes in ecological dynamics resulting
from changes in socio-political factors
251
J.K. Dagsvik, Yu Zhu and R. Aaberge (1998): A
Framework for Empirical Modelling of Consumer
Demand with Latent Quality Attributes
T. Fæhn and E. Holmøy (1999): Welfare Effects of
Trade Liberalisation in Distorted Economies. A
Dynamic General Equilibrium Assessment for Norway
252
R. Aaberge (1999): Sampling Errors and Cross-Country
Comparisons of Income Inequality
253
I. Svendsen (1999): Female labour participation rates in
Norway – trends and cycles
254
A. Langørgen and R. Aaberge: A Structural Approach
for Measuring Fiscal Disparities
255
B. Halvorsen and B.M. Larsen (1999): Changes in the
Pattern of Household Electricity Demand over Time
229
230
R. Aaberge, U. Colombino and S. Strøm (1998): Social
Evaluation of Individual Welfare Effects from Income
Taxation: Empirical Evidence Based on Italian Data for
Married Couples
231
R. Nesbakken (1998): Residential Energy Consumption
for Space Heating in Norwegian Households. A
Discrete-Continuous Choice Approach
232
R. Nesbakken (1998): Price Sensitivity of Residential
Energy Consumption in Norway
256
P. Boug (1999): The Demand for Labour and the Lucas
Critique. Evidence from Norwegian Manufacturing
233
M. Søberg (1998): Uncertainty and International
Negotiations on Tradable Quota Treaties
257
M. Rege (1999): Social Norms and Private Provision of
Public Goods: Endogenous Peer Groups
234
J.K. Dagsvik and L. Brubakk: Price Indexes for
Elementary Aggregates Derived from Behavioral
Assumptions
258
L. Lindholt (1999): Beyond Kyoto: CO2 permit prices
and the markets for fossil fuels
259
235
E. Biørn, K.-G. Lindquist and T. Skjerpen (1998):
Random Coefficients and Unbalanced Panels: An
Application on Data from Norwegian Chemical Plants
R. Bjørnstad and R. Nymoen (1999): Wage and
Profitability: Norwegian Manufacturing 1967-1998
21
260
T.O. Thoresen and K.O. Aarbu (1999): Income
Responses to Tax Changes – Evidence from the
Norwegian Tax Reform
261
B. Bye and K. Nyborg (1999): The Welfare Effects of
Carbon Policies: Grandfathered Quotas versus
Differentiated Taxes
262
T. Kornstad and T.O. Thoresen (1999): Means-testing
the Child Benefit
263
M. Rønsen and M. Sundström (1999): Public Policies
and the Employment Dynamics among new Mothers – A
Comparison of Finland, Norway and Sweden
264
J.K. Dagsvik (2000): Multinomial Choice and
Selectivity
265
Y. Li (2000): Modeling the Choice of Working when the
Set of Job Opportunities is Latent
266
E. Holmøy and T. Hægeland (2000): Aggregate
Productivity and Heterogeneous Firms
267
S. Kverndokk, L. Lindholt and K.E. Rosendahl (2000):
Stabilisation of CO2 concentrations: Mitigation
scenarios using the Petro model
282
M. Rege (2000): Networking Strategy: Cooperate Today
in Order to Meet a Cooperator Tomorrow
283
P. Boug, Å. Cappelen and A.R. Swensen (2000):
Expectations in Export Price Formation: Tests using
Cointegrated VAR Models
284
E. Fjærli and R. Aaberge (2000): Tax Reforms, Dividend
Policy and Trends in Income Inequality: Empirical
Evidence based on Norwegian Data
285
L.-C. Zhang (2000): On dispersion preserving estimation
of the mean of a binary variable from small areas
286
F.R. Aune, T. Bye and T.A. Johnsen (2000): Gas power
generation in Norway: Good or bad for the climate?
Revised version
287
A. Benedictow (2000): An Econometric Analysis of
Exports of Metals: Product Differentiation and Limited
Output Capacity
288
A. Langørgen (2000): Revealed Standards for
Distributing Public Home-Care on Clients
289
T. Skjerpen and A.R. Swensen (2000): Testing for longrun homogeneity in the Linear Almost Ideal Demand
System. An application on Norwegian quarterly data for
non-durables
268
E. Biørn, K-G. Lindquist and T. Skjerpen (2000): Micro
Data On Capital Inputs: Attempts to Reconcile Stock
and Flow Information
290
269
I. Aslaksen and C. Koren (2000): Child Care in the
Welfare State. A critique of the Rosen model
K.A. Brekke, S. Kverndokk and K. Nyborg (2000): An
Economic Model of Moral Motivation
291
A. Raknerud and R. Golombek: Exit Dynamics with
Rational Expectations
292
E. Biørn, K-G. Lindquist and T. Skjerpen (2000):
Heterogeneity in Returns to Scale: A Random
Coefficient Analysis with Unbalanced Panel Data
293
K-G. Lindquist and T. Skjerpen (2000): Explaining the
change in skill structure of labour demand in Norwegian
manufacturing
294
K. R. Wangen and E. Biørn (2001): Individual Heterogeneity and Price Responses in Tobacco Consumption:
A Two-Commodity Analysis of Unbalanced Panel Data
295
A. Raknerud (2001): A State Space Approach for
Estimating VAR Models for Panel Data with Latent
Dynamic Components
270
R. Bjørnstad (2000): The Effect of Skill Mismatch on
Wages in a small open Economy with Centralized Wage
Setting: The Norwegian Case
271
R. Aaberge (2000): Ranking Intersecting Lorenz Curves
272
J.E. Roemer, R. Aaberge , U. Colombino, J, Fritzell, S.P.
Jenkins, I. Marx, M. Page, E. Pommer, J. Ruiz-Castillo,
M. Jesus SanSegundo, T. Tranaes, G.G.Wagner and I.
Zubiri (2000): To what Extent do Fiscal Regimes
Equalize Opportunities for Income Acquisition Among
citizens?
273
I. Thomsen and L.-C. Zhang (2000): The Effect of Using
Administrative Registers in Economic Short Term
Statistics: The Norwegian Labour Force Survey as a
Case Study
296
274
I. Thomsen, L.-C. Zhang and J. Sexton (2000): Markov
Chain Generated Profile Likelihood Inference under
Generalized Proportional to Size Non-ignorable Nonresponse
J.T. Lind (2001): Tout est au mieux dans ce meilleur des
ménages possibles. The Pangloss critique of equivalence
scales
297
J.F. Bjørnstad and D.E. Sommervoll (2001): Modeling
Binary Panel Data with Nonresponse
275
A. Bruvoll and H. Medin (2000): Factoring the
environmental Kuznets curve. Evidence from Norway
298
276
I. Aslaksen, T. Wennemo and R. Aaberge (2000): "Birds
of a feather flock together". The Impact of Choice of
Spouse on Family Labor Income Inequality
Taran Fæhn and Erling Holmøy (2001): Trade
Liberalisation and Effects on Pollutive Emissions and
Waste. A General Equilibrium Assessment for Norway
299
J.K. Dagsvik (2001): Compensated Variation in Random
Utility Models
277
I. Aslaksen and K.A. Brekke (2000): Valuation of Social
Capital and Environmental Externalities
300
K. Nyborg and M. Rege (2001): Does Public Policy
Crowd Out Private Contributions to Public Goods?
278
H. Dale-Olsen and D. Rønningen (2000): The
Importance of Definitions of Data and Observation
Frequencies for Job and Worker Flows - Norwegian
Experiences 1996-1997
301
T. Hægeland (2001): Experience and Schooling:
Substitutes or Complements
302
279
K. Nyborg and M. Rege (2000): The Evolution of
Considerate Smoking Behavior
T. Hægeland (2001): Changing Returns to Education
Across Cohorts. Selection, School System or Skills
Obsolescence?
280
M. Søberg (2000): Imperfect competition, sequential
auctions, and emissions trading: An experimental
evaluation
303
R. Bjørnstad: (2001): Learned Helplessness,
Discouraged Workers, and Multiple Unemployment
Equilibria in a Search Model
281
L. Lindholt (2000): On Natural Resource Rent and the
Wealth of a Nation. A Study Based on National
Accounts in Norway 1930-95
22