Does the Internet Help the Unemployed Find Jobs?

Abstract

This paper investigates whether using the Internet for job search helps unemployed workers find jobs. The self-selection of Internet job searchers is addressed by the instrumental variable (IV) estimation strategy. I isolate potentially exogenous variation in individuals’ Internet job search status by exploiting variation in adoption of the Internet across occupations. The fraction of unemployed workers using the Internet to search for jobs increased more rapidly in occupations with higher computer use rates before the introduction of the Internet. The analysis sample consists of unemployed workers from the September 1992 Basic Monthly Current Population Survey (CPS) and the December 1998, August 2000, and September 2001 CPS Computer and Internet Use Supplements. The unemployed workers are longitudinally matched with their employment outcomes from the subsequent CPS files. The panel structure of the CPS enables us to follow the individuals for up to subsequent 15 months. The IV results suggest that unemployed workers searching for jobs online are around 14 percentage points more likely to be employed during the 15 month follow-up period than unemployed workers who do not engage in Internet job search. This implies that using the Internet for job search raises the 15-month job finding rate by around 26 percent at the mean.