This paper establishes a new fact about the compositional changes in the pool of unemployed over the US business cycle. Using microdata from the Current Population Survey for the years 1962-2012, it ...documents that in recessions the pool of unemployed shifts toward workers with high wages in their previous job and that these shifts are driven by the high cyclicality of separations for high-wage workers. The paper finds that standard theories of wage setting and unemployment have difficulty in explaining these patterns and evaluates a number of alternative theories that do better in accounting for the new fact.
This paper uses job seekers’ elicited beliefs about job finding to disentangle the sources of the decline in job-finding rates by duration of unemployment. We document that beliefs have strong ...predictive power for job finding, but are not revised downward when remaining unemployed and are subject to optimistic bias, especially for the long-term unemployed. Leveraging the predictive power of beliefs, we find substantial heterogeneity in job finding with the resulting dynamic selection explaining most of the observed negative duration dependence in job finding. Moreover, job seekers’ beliefs underreact to heterogeneity in job finding, distorting search behavior and increasing long-term unemployment.
Abstract This article explores the relationship between the duration of a vacancy and the starting wage of a new job, using linked data on vacancies, the posting establishments, and the workers ...eventually filling the vacancies. The unique combination of large-scale, administrative worker, establishment, and vacancy data is critical for separating establishment- and job-level determinants of vacancy duration from worker-level heterogeneity. Conditional on observables, we find that vacancy duration is negatively correlated with the starting wage and its establishment component, with precisely estimated elasticities of −0.07 and −0.21, respectively. While the negative relationship is qualitatively consistent with search-theoretic models where firms use the wage as a recruiting device, these elasticities are small, suggesting that firms’ wage policies can account only for a small fraction of the variation in vacancy filling across establishments.
We develop a unique survey that focuses on the job search behavior of individuals regardless of their labor force status and field it annually starting in 2013. We use our survey to study the ...relationship between search effort and outcomes for the employed and non‐employed. Three important facts stand out: (1) on‐the‐job search is pervasive, and is more intense at the lower rungs of the job ladder; (2) the employed are at least three times more effective than the unemployed in job search; and (3) the employed receive better job offers than the unemployed. We set up a general equilibrium model of on‐the‐job search with endogenous search effort, calibrate it to fit our new facts, and find that the search effort of the employed is highly elastic. We show that search effort substantially amplifies labor market responses to productivity shocks over the business cycle.
Wage Dispersion and Search Behavior Hall, Robert E.; Mueller, Andreas I.
The Journal of political economy,
08/2018, Letnik:
126, Številka:
4
Journal Article
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We use a rich new body of data on the experiences of unemployed job seekers to determine the sources of wage dispersion and to create a search model consistent with the acceptance decisions the job ...seekers made. We identify the distributions of four key variables: offered wages, offered nonwage job values, job seekers’ nonwork alternatives, and job seekers’ personal productivities. We find that, conditional on personal productivity, the standard deviation of offered log wages is moderate, at 0.24, whereas the dispersion of the offered nonwage component is substantially larger, at 0.34. The resulting dispersion of offered job values is 0.38.
This paper provides evidence on the behavior of reservation wages over the spell of unemployment, using high-frequency longitudinal data on unemployed workers in New Jersey. In comparison to a ...calibrated job search model, the reservation wage starts out too high and declines too slowly, on average, suggesting that many workers persistently misjudge their prospects or anchor their reservation wage on their previous wage. The longitudinal nature of the data also allows for testing the relationship between job acceptance and the reservation wage, where the reservation wage is measured from a previous interview to avoid bias due to cognitive dissonance.
This paper provides new evidence on the time use and emotional well-being of unemployed individuals in the weeks before and after starting a new job. The major findings are: (1) time spent on home ...production drops sharply at the time of re-employment, even when controlling for individual fixed effects; (2) time spent on leisure-related activities, which the unemployed find less enjoyable, drops on re-employment, but less so when controlling for individual fixed effects; (3) the unemployed report higher levels of sadness during specific episodes of the day than the employed; and (4) sadness decreases abruptly at the time of re-employment. PUBLICATION ABSTRACT
•Studies labor supply using direct measure of desired work hours during pandemic.•Finds U.S. labor market tighter during pandemic than implied by unemployment rate.•Tightness driven by decline in ...willingness to work by those out of labor force.•Decline highlights importance of intensive margin of labor force participation.
We examine the effect of the Covid pandemic on willingness to work along both the extensive and intensive margins of labor supply. Special survey questions in the Job Search Supplement of the Survey of Consumer Expectations (SCE) allow us to elicit information about individuals’ desired work hours for the 2013–2021 period. Using these questions, along with workers’ actual labor market participation, we construct a labor market underutilization measure, the Aggregate Hours Gap (AHG), following Faberman et al. (2020). The AHG captures changes in labor market underutilization for the full population along both the extensive and intensive margins using data on desired work hours as a measure of their potential labor supply. We find that a sharp increase in the AHG during the Covid pandemic essentially disappeared by the end of 2021. We also document a sharp decline in desired work hours during the pandemic that persists through the end of 2021 and is roughly double the drop in the labor force participation rate. Ignoring the decline in desired hours overstates the degree of underutilization by 2.5 percentage points (12.5%). Our findings suggest that, through 2021Q4, the labor market was tighter than suggested by the unemployment rate and the adverse labor supply effect of the pandemic was more pronounced than implied by the labor force participation rate. These discrepancies underscore the importance of taking into account the intensive margin for both labor market underutilization and potential labor supply.
Social Security Disability Insurance (SSDI) awards rise during recessions. If marginal applicants are able to work but unable to find jobs, countercyclical Unemployment Insurance (UI) benefit ...extensions may reduce SSDI uptake. Exploiting UI extensions in the Great Recession as a source of variation, we find no indication that expiration of UI benefits causes SSDI applications and can rule out effects of meaningful magnitude. A supplementary analysis finds little overlap between the two programs’ recipient populations: only 28% of SSDI awardees had any labor force attachment in the prior calendar year, and of those, only 4% received UI.
This paper analyses how risk profiling is used to assign unemployed job seekers to job search counseling in Flanders, Belgium. We compare algorithmic selection to self-selection and selection by job ...search counselors. We discuss practical challenges for the implementation of risk profiling and highlight avenues for further research. We find that algorithmic assignment is used for only a small fraction of the sample and that job search counselors appear to have valuable private information on job seekers' reemployment prospects beyond what is captured by the algorithmic risk score.
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