Competition between Employed and Unemployed Job Applicants: Swedish Evidence*

We use the Swedish Applicant Database to investigate empirically whether being unemployed per se reduces the probability of getting contacted by a firm. All searchers looking for a new job are invited to submit their personal details to this database over the internet. Since we have access to exactly the same information as the firms, we can minimize the problems associated with unobserved heterogeneity. Our results show that an unemployed applicant faces a lower contact probability than an otherwise identical employed applicant, thus supporting the notion that firms view employment status as a signal of productivity.