Unemployment scarring by gender: Human capital depreciation or stigmatization? Longitudinal evidence from the Netherlands, 1980–2000

• Unemployment scarring is prevalent in the Netherlands, with about 15% among women and 18% among men.
• The mechanisms underlying unemployment scarring differ among men and women.
• Among women, scarring effects are short-lived and arise mainly due to human capital depreciation.
• Among men scarring is driven by stigma and contingent upon age, ethnicity, and economic conditions.

Using longitudinal data from the Dutch Labor Force Supply Panel (OSA), this article examines how unemployment scarring (i.e., wage setbacks following unemployment) and its underlying mechanisms operate across gender in the Netherlands over the period 1985–2000. A series of fixed effect panel models that correct for unobserved heterogeneity, reveal a notable disparity in unemployment scarring by gender. Interestingly, while unemployment scarring is short-lived and partly conditional upon human capital differences among women, it is strongly persistent among men and contingent upon old age, ethnicity, and tight economic conditions. Our findings provide new evidence regarding unemployment scarring by gender while they support the hypothesis that among women the effects of unemployment scarring are predominantly driven by human capital depreciation, while among men stigma effects dominate.