A Genealogy of the Scarring Theory of Unemployment: Reconsidering the Economic Narrative That Drives Activation Policies

Unemployment scarring has been adopted as a key concept in social policy, and despite being variously defined and inadequately theorised, it is widely used to justify the administration of labour market activation policies. Herein, we develop a critical genealogy of scarring, exploring a recently crystallised concept that amalgamates empirical work on labour detachments, discouraged workers, signalling, reservation wage fluctuation, and hysteresis; then yokes this distinct formulation together with behavioural economics research on the psychological impacts of unemployment. Scarring as translated into social policy is cleaved from the complexity of its labour market economic origins, particularly methodological limitations, and becomes an evocative shorthand, a black-box explanation of unemployment. Our genealogy suggests that scarring is not conceptually robust enough to support and justify activation and workfare, and more broadly, explores the complex relationship of policy problems and policy solutions.