Abstract

• SDT, COR and Scarcity Theory predict financial hardship reduces quality of job search. • We test this effect of hardship on search effectiveness in a PS matching analysis. • We control for confounders and the effect of financial hardship on search intensity. • Using Australian data, hardship reduces—through search quality—search effectiveness. • We show the importance of controlling for confounders in labor market research. Following a group of 2,973 Australian unemployed job seekers over time, we confirm predictions from Self-Determination Theory, Conservation of Resources Theory and Scarcity Theory that the presence of financial hardship during job search adversely affects job search quality and subsequently job search effectiveness (measured one year later). We show the importance in labor market research of controlling for a range of confounding factors including the impact of financial hardship on job search intensity. The implemented controls allow more precise inferences of the effect of financial hardship on job search quality/effectiveness, than so far achieved in this emerging body of literature.

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