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Job Search with Nonparticipation

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Author Info
Frijters, Paul
van der Klaauw, Bas

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Abstract

In a non-stationary job search model we allow unemployed workers to have a permanent option to leave the labour force. Transitions into nonparticipation occur when reservation wages drop below the utility of being nonparticipant. Taking account of these transitions allows the identification of the duration dependence in the job offer arrival rate and the wage offer distribution. We estimate the structural model with individual data from the German Socio-Economic Panel and use simulated maximum likelihood. The results show that the presence of significant negative duration dependence in the wage offer distribution causes reservation wages to decrease. The rate at which job offers arrive is constant over the unemployment duration. These findings provide micro-evidence that the job search environment of unemployed workers is non-stationary because of loss of skills.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3922.

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Date of creation: Jun 2003
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Handle: RePEc:cpr:ceprdp:3922

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Related research
Keywords: duration dependence; endogenous nonparticipation; heterogeneity; non-stationary job search; simulated maximum likelihood; structural empirical analysis;

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Find related papers by JEL classification:
C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Statistical Simulation Methods
C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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    Other versions:
  3. Calmfors, Lars & Lang, Harald, 1995. "Macroeconomic Effects of Active Labour Market Programmes in a Union Wage-Setting Model," Economic Journal, Royal Economic Society, vol. 105(430), pages 601-19, May. [Downloadable!] (restricted)
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    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. J. Ignacio García Pérez & Alfonso R Sánchez Martín, 2008. "Social Security and the search behaviour of workers approaching retirement," Working Papers 08.03, Universidad Pablo de Olavide, Department of Economics. [Downloadable!]
    Other versions:
  2. Paul Frijters & Dirk Bezemer & Uwe Dulleck, 2005. "Contacts, Social Capital and Market Institutions - A Theory of Development," Paul Frijters Discussion Papers 2005-1, School of Economics and Finance, Queensland University of Technology. [Downloadable!]
    Other versions:
  3. Paul Frijters & Deborah Cobb-Clark & Guyonne Kalbzx, 2004. "Do You Need a Job to Find a Job," Paul Frijters Discussion Papers 2004-3, School of Economics and Finance, Queensland University of Technology. [Downloadable!]
    Other versions:
  4. Gautier, Pieter A & Moraga-González, José-Luis & Wolthoff, Ronald, 2007. "Structural Estimation of Search Intensity: Do Non-Employed Workers Search Enough?," CEPR Discussion Papers 6440, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Aico van Vuuren & Michiel van Leuvensteijn, 2007. "The impact of homeownership on unemployment in the Netherlands," CPB Discussion Papers 86, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  6. Sarah Brown & Karl Taylor, 2008. "Reservation Wages, Expected Wages and Labour Market Outcomes: Analysis of Individual Level Panel Data," Working Papers 2008008, The University of Sheffield, Department of Economics, revised Jul 2008. [Downloadable!]
  7. Broersma, Lourens & Butter, Frank A.G. den & Kock, Udo, 2003. "A Cointegration Model for Search Equilibrium Wage Formation," Serie Research Memoranda 0021, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics. [Downloadable!]
  8. José Ignacio García Pérez, 2003. "Non-stationary Job Search When Jobs Do Not Last Forever: A Structural Estimation to Evaluate Alternative Unemployment Insurance Systems," Economic Working Papers at Centro de Estudios Andaluces E2003/49, Centro de Estudios Andaluces. [Downloadable!]
  9. Frijters, Paul & van der Klaauw, Bas, 2004. "Job Search with Nonparticipation," IZA Discussion Papers 1407, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  10. Lollivier, Stefan & Rioux, Laurence, 2005. "A Structural Non-Stationary Model of Job Search: Stigmatization of the Unemployed by Job Offers or Wage Offers?," CEPR Discussion Papers 5108, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  11. Armin Falk & David Huffman & Uwe Sunde, 2006. "Do I Have What It Takes? Equilibrium Search with Type Uncertainty and Non-Participation," IZA Discussion Papers 2531, Institute for the Study of Labor (IZA). [Downloadable!]
  12. Michael Rosholm & Ott Toomet, 2005. "A Search Model of Discouragement," IZA Discussion Papers 1633, Institute for the Study of Labor (IZA). [Downloadable!]
  13. Armin Falk & David Huffman & Uwe Sunde, 2006. "Self-Confidence and Search," IZA Discussion Papers 2525, Institute for the Study of Labor (IZA). [Downloadable!]
  14. Deborah Cobb-Clark & Paul Frijters & Guyonne Kalb, 2004. "Job Search Success: Comparing Job Offer Rates In and Out of Employment," Melbourne Institute Working Paper Series wp2004n13, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  15. Markus Pannenberg, 2007. "Risk Aversion and Reservation Wages," IZA Discussion Papers 2806, Institute for the Study of Labor (IZA). [Downloadable!]
  16. Lourens Broersma & F. A. G. den Butter & Udo Kock, 2004. "A Cointegration Model for Search Equilibrium Wage Formation," IMF Working Papers 04/92, International Monetary Fund. [Downloadable!]
    Other versions:
  17. Bergemann, Annette & van den Berg, Gerard J., 2008. "From Giving Birth to Paid Labor: The Effects of Adult Education for Prime-Aged Mothers," IZA Discussion Papers 3600, Institute for the Study of Labor (IZA). [Downloadable!]
  18. Peter Haan & Arne Uhlendorff, 2007. "Intertemporal Labor Supply and Involuntary Unemployment," IZA Discussion Papers 2888, Institute for the Study of Labor (IZA). [Downloadable!]
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