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Time Preferences and Job Search: Evidence from France

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  • Bassem Ben Halima
  • Mohamed Ali Ben Halima

Abstract

Increasing impatience reduces search efforts of unemployed job seekers and therefore decreases the exit rate from unemployment. Also, impatience reduces reservation wage and increases the exit rate. To determine the overall effect of impatience on the exit rate from unemployment, we distinguish between exponential and hyperbolic time preferences. Search effort dominates the reservation wage and decreases the exit rate from unemployment if individuals have hyperbolic, rather than exponential, preferences. Using the French sample of the European Household Panel Survey, we found that search effort has a strong effect on the duration of unemployment, whereas the reservation wage is not significant. This result shows that the job seekers have hyperbolic preferences. Hyperbolic preferences affect problems associated with job search and policies aimed at reducing unemployment. Copyright 2009 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by CEIS in its journal LABOUR.

Volume (Year): 23 (2009)
Issue (Month): 3 (09)
Pages: 535-558

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Handle: RePEc:bla:labour:v:23:y:2009:i:3:p:535-558

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Cited by:
  1. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  2. Thomas van Huizen & Janneke Plantenga, 2013. "Job Search Behaviour and Time Preferences: Evidence from the Netherlands," Working Papers 13-03, Utrecht School of Economics.
  3. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 811-846, August.
    • Scheinkman, Jose A. & Soutter, Christine L. & Glaeser, Edward Ludwig & Laibson, David I., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.

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