Which factors determine unemployment duration for the individual? It’s not just objective macroeconomic conditions:
For our econometric duration analysis, we use the well-accepted taxonomy “Big Five” to classify personality traits. Based on individual unemployment data taken from the German Socio-Economic Panel (SOEP) our empirical findings reveal that the personality traits Conscientiousness and Neuroticism have a strong impact on the instantaneous probability of finding a job, where the former has a positive effect and the latter has a negative effect.
These results do not discriminate against all theories of nominal wage stickiness, but they may discriminate against some matching models which suggest that the employer and worker never come together in the first place. They also discriminate against models which suggest the employer won’t consider making any lower wage offer to any group of workers. Under one alternative option, there is a chance for a mutually beneficial transaction, if the laborers can demonstrate that they will be flexible and productive and non-resentful. Another alternative model (and to me less plausible) on the table is that the workers get some offer in any case, but the more neurotic workers do not take it. In any case, labor quality very much matters.