Job Search Model Research Articles

Employer Screening and Optimal Unemployment Insurance

Abstract Field experiments show that employers are less likely to consider long-term unemployed job-seekers for interviews. We study the implications for optimal unemployment insurance (UI). Based on a structural model of job search and recruitment, estimated with German data, we analyse the optimal two-tier unemployment system. We find that screening makes the optimal initial benefit level four percentage points higher and the potential benefit duration seven months longer. Using an extended Baily-Chetty formula, we study the mechanisms through which screening affects the consumption smoothing gain and moral hazard cost of providing UI and highlight the role of the externality from endogenous firm behaviour.

Reservation Wages and the Wage Flexibility Puzzle

Abstract Using micro data for the UK and Germany, we provide novel evidence on the cyclical properties of reservation wages and estimate that wages and reservation wages are characterised by moderate and very similar degrees of cyclicality. Several job search models that quantitatively match the cyclicality of wages tend to overpredict the cyclicality in reservation wages. We show that this puzzle can be addressed when reservation wages display backward-looking reference dependence. Model calibrations that allow for reference dependence match the empirically observed cyclicality of wages and reservation wages for plausible value of all other model parameters.

Applying to Lead: A Mixed-Methods Investigation of Prospective Principals’ Job Application Strategies in Two Urban Districts

Purpose: Urban school districts often face challenges in filling principal vacancies with effective leaders, especially in high-needs schools. Prospective principals’ engagement with the job application process may contribute to these challenges. The goal of this study is to better understand the job search strategies and behaviors of prospective principals and how their approaches might contribute to leadership staffing challenges in high-needs schools. Research Design and Methods: We employ a convergent mixed-methods design that draws on data from two urban school systems. We pair analysis of interviews of 36 principals who have recently navigated the districts’ hiring systems with multiple years of applications and other administrative data provided by the two districts. We explored how patterns and themes that emerged from each data source were confirmed or disconfirmed with the other source. Findings: Guided by a job-search model, our analysis uncovers three main findings. First, the typical principal applicant conducted a targeted rather than a wide search, reflecting multiple strategies, preferences, and relational factors. Second, elementary educators showed a strong propensity to apply to the same grade level. Third, leaders applied to schools serving larger proportions of historically marginalized students at similar rates as other schools, reflecting their motivations to work with underserved students. Implications for Research and Practice: Considerations informing prospective principals’ job searches are multifaceted. High-needs schools are desirable to many principal candidates. Identifying and strategically recruiting candidates with preferences for working in such schools can be a strategy for districts seeking to overcome challenges in filling principal vacancies.

Evolutions and paths: Voluntary employee turnover theories in search of new empirical tests

The retention of human capital remains a vital point of interest for both organizations and scholars today, as it has for over a century. While many models of voluntary turnover exist, we identify two turnover theories, Steel's (2002) Evolutionary Job Search Model of Turnover and Lee and Mitchell's Unfolding Model of Turnover, that we believe offer significant opportunities for future research. In this editorial, we review these two theories, highlighting the impact of each and offering several recommendations for future replication. Specifically, after reviewing 183 articles that cited Steel, we found that only a few of these directly tested the core propositions of the model, likely due to the complexity of the challenges of sufficiently capturing the dynamic components, and none have fully tested the model. Additionally, despite being published only six years prior, we identified 748 articles that cited Lee and Mitchell, yet we found that only 127 empirically examined the model, with most focused on specific components of the model, and only 15 attempted to test the entire model. We provide several methodological and theoretical suggestions for progressing these two models towards a better understanding of voluntary turnover.

AGE DISCONTINUITY AND NONEMPLOYMENT BENEFIT POLICY EVALUATION THROUGH THE LENS OF JOB SEARCH THEORY

AbstractRecent papers use regression discontinuity designs (RDDs) based on age discontinuity to evaluate social assistance (SA) and unemployment insurance (UI) extension policies. Job search theory predicts that such designs generate biased estimates of the policy‐relevant treatment effect. Owing to market frictions, people below the age threshold modify their search behavior in expectation of future eligibility. We use a job search model to quantify the biases on various datasets in the literature. The impacts of SA benefits on employment are underestimated, whereas those of UI extensions on nonemployment duration are overestimated. The article provides insights for RDD evaluations of age‐discontinuous policies.

Job search with commuting and unemployment insurance: A look at workers’ strategies in time

Unemployed workers search for jobs that ideally offer both high wages and short commutes. But would they accept jobs with lower wages or longer commutes or both as the unemployment spell lengthens? Using a unique panel of Austrian workers, we find that job seekers do indeed accept jobs with significantly lower wages. However, the majority group of job seekers who used to commute to jobs located outside their municipality of residence tend to increasingly accept jobs in their home municipality, and do not necessarily broaden geographically their search. Based on quasi-experimental variations in the duration of unemployment benefits, we find that this evolution of commuting patterns is not linked to the loss of benefits. We explain these findings through the lens of a job search model where flexible parameters such as search costs are allowed to vary across space and time. We estimate that search costs are substantial and increase differently over time for local and non-local jobs, accounting for the patterns found in the data. A counterfactual policy exercise suggests that unemployment insurance does not hinder geographical mobility. Competing mechanisms are discussed and their role is left to future research.

Commuting barriers to low-wage employment

Lack of access to affordable transportation has been hypothesized to be a barrier to employment among low-wage workers. We build a structural job search model to investigate how commuting costs influence the employment decisions of low-wage workers in the United States, and whether differences in commuting by race and education can explain observed disparities in employment. We find that commuting itself poses a significant barrier to overall low-wage employment, as the associated costs are high relative to potential wages. However, we find that inter-group differences in commuting costs account for a much smaller fraction of inter-group employment disparities than do differences in other labor market factors such as the wage offer distribution and offer arrival rates.

Desired work-leisure balance in a partial equilibrium job search model with multiple job holding

Abstract Work-leisure balances are beneficial to society. A partial equilibrium job search model is developed to explain desired work-leisure tradeoffs for single-job holders and multiple-job holders. Significant work-leisure mismatches are found: 63% of the observations underwork by an average of 17 hours per week, while 37% overwork by 8.5 hours. The value of leisure is approximately four times the average hourly real wage when a single job is held, and it drops by one-third when multiple jobs are held. Models ignoring possibilities of multiple jobholding overstate the elasticity of leisure and understate the value of leisure.

Interactions between job search and housing decisions: A structural estimation

AbstractHousing and financial market shocks affect frictional labor markets. We structurally estimate a model of job search with accumulation of liquid and residential wealth and randomly persistent house prices. Using NLSY data from 1978 to 2000, we show that reservation wages and nonemployment increase in total wealth and respond to the composition of wealth, home prices and financial markets' tightness. We cluster counties of residence by HPI growth and find a residential wealth effect on labor markets that erodes with fast home price growth. When we counterfactually fix downpayment rates above observed trajectories, nonemployment becomes one percentage point higher in counties of average or fast home price growth and 1.2 percentage points lower where home prices are stagnant. Fixing interest rates at 2% generates a 0.5 percentage point decline in nonemployment in counties with no home price growth, but no changes where price growth is average or fast.

Characterization of optimal durations of unemployment benefits in a nonstationary job search model

This paper studies the optimal duration of unemployment insurance (UI) benefits in a job search model where a risk neutral UI agency cannot monitor the search effort of risk-averse workers. Unemployment assistance benefits for noneligible unemployed are taken as exogenous by the unemployment agency which chooses optimally the constant level of UI benefits, the date of their exhaustion and the constant level of the financing tax. So, due to possible finite values of the duration of unemployment benefits, the resulting agency’s problem involves nonstationarities that appears somewhat difficult to solve from the analytical viewpoint. Based upon the geometric properties of the incentive and budget constraints, we successfully provide two explicit sufficient conditions regarding the parameters of the model for obtaining a positive and finite optimal duration of UI. We then give a theoretical rationale for most unemployment insurance systems.

Exploration of Dynamic Optimization Paths for Work Search Models under Incomplete Information Conditions

This article is based on the application exploration of dynamic optimization theory under incomplete information conditions. Based on the job search model and its extended model, this theory is analyzed in detail, explaining the relationship between unemployment rate and wages in the labor market, exploring the impact of Western labor unemployment formation, summarizing the experience of urban unemployment in the process of social construction in the new era, and developing high-quality and high-quality employment work for college students, It will have very important inspiration and reference significance.

Labor Market Responses to Unemployment Insurance: The Role of Heterogeneity

We document considerable scope of heterogeneity within the unemployed, especially when they are divided along eligibility for and receipt of unemployment insurance (UI). We study the implications of this heterogeneity on UI’s insurance-incentive trade-off using a heterogeneous-agent job search model capable of matching the wealth and income differences that distinguish UI recipients from nonrecipients. Insurance benefits are larger for UI recipients who are predominantly wealth poor. Meanwhile, incentive costs are nonmonotonic in wealth because the poorest individuals, who value employment, exhibit weak responses. Differential elasticities imply that accounting for the composition of recipients is material to the evaluation of UI’s insurance-incentive trade-off. (JEL D91, E24, E32, J64, J65)

Job Search, Spatial Constraints, and Unemployment Duration: An Empirical Analysis of the Cameroonian Case

The individual transition from unemployment to employment is conditioned by various elements. If some of them concern directly the individual characteristics of workers, while others implicate indeed their environment when searching for a job. The residential location, housing status, and high travel distances to each labor market area are factors that can influence the exit rate of unemployment. This paper aims to integrate, in a job search model with endogenous intensity, the spatial horizon of prospecting. This horizon is introduced through the prospecting distance, which influences both the arrival rate of offers and the search costs. The equilibrium properties of the model lead to an indeterminate effect of the prospecting distance on the unemployment duration. The micro econometric estimation of the structural model allows us to deal with this ambiguity. The method adopted takes into account not only the selection rule on access to employment but also the endogeneity of the choice of spatial mobility. Results highlight that the exit from unemployment is shorter as the prospecting distance increases, but the increase in this prospecting distance does not lead to a decrease in the reserve wage.

University-to-work transitions in Germany – do graduate job seekers benefit from migration and work experience?

ABSTRACT This paper investigates the effects of migration and work experience on university-to-work transitions of German university graduates. We use a job search model, signaling and social network theory to discuss different links between the duration of labor market entry, graduate mobility and work experience. We apply event history analyses and make use of administrative social security records to examine whether work experience and pre-study as well as post-study migration accelerates the labor market entry of graduates. Our regression results stress the importance of both mobility and work experience for the length of the transition period. However, whether the effect is beneficial or adverse depends on the type of graduate migration and previous employment.

Worker selectivity and fiscal externalities from unemployment insurance

A robust prediction of job search models is that unemployment insurance (UI) makes workers more selective about which jobs they accept, thereby raising average accepted wages and thus generating a positive fiscal externality. We provide a sufficient-statistics formula for evaluating the size of this selectivity effect and argue theoretically that it is likely to be small. In a standard sequential search model, the effect of UI on wages is linked to its effect on the job-finding hazard; the slope of the relationship between these elasticities depends on a small number of estimable statistics, key among them observed worker flows. Plausible calibrations of the model imply that the magnitude of the wage elasticity is small relative to the job-finding elasticity. Although ignoring the wage effect of UI would over-estimate its fiscal cost and under-estimate its welfare benefit, the model-implied formula predicts the magnitude of this bias to be small.

Gender Differences in Job Search and the Earnings Gap: Evidence from the Field and Lab

Abstract This article investigates gender differences in the job search process in the field and lab. Our analysis is based on rich information on initial job offers and acceptances from undergraduates of Boston University’s Questrom School of Business. We find (i) a clear gender difference in the timing of job offer acceptance, with women accepting jobs substantially earlier than men, and (ii) a sizable gender earnings gap in accepted offers, which narrows in favor of women over the course of the job search period. To understand these patterns, we develop a job search model that incorporates gender differences in risk aversion and overoptimism about prospective offers. We validate the model’s assumptions and predictions using the survey data and present empirical evidence that the job search patterns in the field can be partly explained by the greater risk aversion displayed by women and the higher levels of overoptimism displayed by men. We replicate these findings in a laboratory experiment that features sequential job search and provide direct evidence on the purported mechanisms. Our findings highlight the importance of risk preferences and beliefs for gender differences in job-finding behavior and, consequently, early-career wage gaps among the highly educated.

THE WELFARE EFFECTS OF MANDATORY REEMPLOYMENT PROGRAMS: COMBINING A STRUCTURAL MODEL AND EXPERIMENTAL DATA

AbstractThis article estimates a model of job search with utility costs and benefits triggered by mandatory reemployment programs. I use data from an experiment that generates exogenous variation in the threat of program participation and an increase in the job finding rate. I calculate the impact of the experiment on worker welfare, and find that participants would be willing to give up 1.5–1.7 weeks of unemployment benefits to avoid participation. These welfare costs vary across workers and are larger for workers with weaker employment prospects. Overall, welfare costs are substantial and therefore important to take into account.

Optimal unemployment policy

AbstractThis paper shows that the optimal policy to deal with unemployment features important roles for monitoring of search and job search assistance, with the optimal combined policy also incorporating more generous unemployment insurance (UI). These results are significantly different from the previous literature, which has overwhelmingly focused on UI on its own. I incorporate two empirically relevant phenomena that have often been ignored: private consumption smoothing and fiscal externalities from income taxes. I estimate a job search model using indirect inference on data from the March Current Population Survey, and simulate the model to evaluate a variety of policy reforms.

A Dynamic Empirical Model of Frictional Spatial Job Search

A Dynamic Empirical Model of Frictional Spatial Job Search

Pengaruh upah reservasi dan umur terhadap lama mencari kerja di Indonesia

Reservation wage is the main variable in the job search model. Age effect based on the life course can also explains the differences in job search behavior. This study aims to understand the effect of reservation wage and age on job search duration. Using Indonesia’s Labor Force Survey, we first estimate the reservation wage of labour force aged 15-64 years with a Two-Step Heckman regression. The results show that reservation wage and age effect have an impact on job search duration. A per cent increase in reservation wages will extend job search duration by 0.97 months. The average reservation wage of the unemployed is higher than employed with a longer job search. The study found indications of discrimination against young job seekers (15-22). They are more likely to accept any work and vulnerable to receive indecent wages and hours. The higher their education and skills, the shorter their job search duration. The study also presumes a gap in agriculture, trade, and the construction industry and informal sector, indicated by high job turnover. The synergy among the workforce, firm, and government will support the utilization of Indonesia’s demographic dividend moment.