No-Help-Wanted Signs and the Duration of Job Search

Abstract

In standard job search models, the increased duration ofjob search in recessions is the result of workers' failure to perceive the downward shift of the wage offer distribution they face.' An alternative explanation, offered by Okun (I98I), argues that the increase in 'no-help-wanted signs', i.e. zero wage offers, in recessions raises workers' optimal duration of search. Since the increased duration of job search is explained without reference to faulty wage expectations, unemployment does not automatically return to the natural rate as workers recognise the new wage offer distribution. The effect of an increase in no-help-wanted signs (a reduction in the probability of receiving a nonzero wage offer) on the duration of search in sequential job search models is ambiguous in general (Barron, I 975). This paper seeks to discover conditions under which such an increase raises the optimal duration of job search. For this purpose, a simple job search model with no-help-wanted signs is developed in the next section.2 Section II shows that, if the distribution of wage offers is log concave, the optimal duration of job search rises with increases in no-help-wanted signs. Other circumstances that yield this result are also examined. The final section contains concluding remarks.