Unemployed Job Seekers Research Articles

Job-Search Perspectives on Migration Behaviour

Although considerable empirical work has been undertaken to estimate interregional migration models, there has not been a corresponding attempt to construct more rigorous theoretical models. For over a decade, Sjaastad's (1962) basic analysis has been unsurpassed. The more recent paper by David (1974), however, attempts to lay a firm microeconomic and risk-analytic foundation for migration models by using concepts arising from job-search theory. His analysis is still quite limited in its perspective on migration, and the present paper attempts to derive a more satisfactory theoretical view of migration. In particular, the various aspects of job-search theory as it has been applied to macroeconomic theory are reviewed and the relevance of these to migration behaviour are assessed. The paper emphasizes (1) differences between search models concerned with wage dispersion and those concerned with job finding, (2) the information possessed by job seekers about different labour markets, (3) alternative search strategies including voluntary job quitting and the migration of unemployed job seekers, and (4) different measures of job-finding probabilities. Although several theoretical models are presented, the main purpose of the paper is to provide a systematic overview of the issues in model design in this important new area of migration research.

Job Search Models, the Duration of Unemployment, and the Asking Wage: Some Empirical Evidence

Three recent untested theoretical models of the wage setting behavior of the unemployed jobseeker by Gronau, Mortensen, and McCall are compared. While the Mortensen model predicts that the minimum asking wage is constant over the duration of unemployment, the models of Gronau and McCall, for different reasons, predict that the minimum asking wage declines over the duration of unemployment. Data from a sample of unemployed jobseekers are used to test the alternative implications. The McCall model, emphasizing downward flexibility in the minimum asking wage in response to revised wage expectations over the duration of unemployment, is the best description of the wage setting behavior of unemployed jobseekers. The search for the microeconomic foundations of macroeconomics has called attention to the wage setting behavior of the unemployed jobseeker. This wage setting behavior has been analyzed as neoclassical maximizing behavior, given incomplete knowledge of demand. Several competing theoretical models have been offered. Dale T. Mortensen has advanced a search model which implies the jobseeker's minimum asking wage would remain constant throughout the duration of search and unemployment [6]. More recently, Reuben Gronau has developed a search model in which he showed that an unemployed job-hunter would reduce his minimum asking wage over the duration of unemployment [3]. Earlier, J. J. McCall [5] proposed a job search model in which a job-hunter lowered his minimum asking wage over the duration of unemployment for a reason other than that suggested by Gronau. The different implications of the The author is currently a Brookings Economic Policy Fellow, Department of Health, Education, and Welfare. * The author wishes to thank Edward D. Kalachek, H. Gregg Lewis, Ethel B. Jones, and the referees for helpful comments. [Manuscript received March 1974; accepted October 1974.] The Journal of Human Resources * X 2 This content downloaded from 157.55.39.27 on Wed, 07 Sep 2016 05:50:25 UTC All use subject to http://about.jstor.org/terms