Do They Come Back Again? Job Search, Labour Market Segmentation and State Dependence as Explanations of Repeat Unemployment.

This study investigates the causes of recurrent unemployment. Using data from the Austrian unemployment register the authors test the explanatory power of three different approaches which appear in the literature: job search theory, labor market segmentation, and state dependence. Whereas job search theory does not seem to be able to explain anything, labor market segmentation does. However, the most powerful determinant of the risk of unemployment repetition is past unemployment history. This micro finding is not inconsistent with theories explaining the persistent high level of unemployment rates.