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Structural Estimation of Search Intensity: Do Non-Employed Workers Search Enough?

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  • Gautier, Pieter A
  • Moraga-González, José-Luis
  • Wolthoff, Ronald

Abstract

We present a structural framework for the evaluation of public policies intended to increase job search intensity. Most of the literature defines search intensity as a scalar that influences the arrival rate of job offers; here we treat it as the number of job applications that workers send out. The wage distribution and job search intensities are simultaneously determined in market equilibrium. We structurally estimate the search cost distribution, the implied matching probabilities, the productivity of a match, and the flow value of non-labor market time; the estimates are then used to derive the socially optimal distribution of job search intensities. From a social point of view, too few workers participate in the labor market while some unemployed search too much. The low participation rate reflects a standard hold-up problem and the excess number of applications result is due to rent seeking behavior. Sizable welfare gains (15% to 20%) can be realized by simultaneously opening more vacancies and increasing participation. A modest binding minimum wage or conditioning UI benefits on applying for at least one job per period, increases welfare.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6440.

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Date of creation: Sep 2007
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Handle: RePEc:cpr:ceprdp:6440

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Keywords: job search; labour market frictions; search costs; structural estimation; wage dispersion; welfare;

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References

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Citations

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Cited by:
  1. Stephen B. DeLoach & Mark Kurt, 2011. "Discouraging Workers: Estimating the Impacts of Macroeconomic Shocks on the Search Intensity of the Unemployed," Working Papers 2011-01, Elon University, Department of Economics.
  2. Ronald Wolthoff, 2009. "Ex Ante and Ex Post Inefficiency in Search and Matching Models," 2009 Meeting Papers 774, Society for Economic Dynamics.
  3. Ronald P. Wolthoff, 2011. "Applications and Interviews - A Structural Analysis of Two-Sided Simultaneous Search," CESifo Working Paper Series 3317, CESifo Group Munich.
  4. Ronald Wolthoff, 2013. "It's About Time: Implications of the Period Length in an Equilibrium Search Model," Working Papers tecipa-476, University of Toronto, Department of Economics.
  5. Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2007. "Frictional Wage Dispersion in Search Models: A Quantitative Assessment," NBER Working Papers 13674, National Bureau of Economic Research, Inc.
  6. Engelhardt, Bryan & Fuller, David L., 2012. "Labor force participation and pair-wise efficient contracts with search and bargaining," Labour Economics, Elsevier, vol. 19(3), pages 388-402.
  7. David L. Fuller, 2010. "Adverse Selection and Moral Hazard: Quantitative Implications for Unemployment Insurance," Working Papers 12004, Concordia University, Department of Economics, revised Sep 2011.
  8. Ping Yan, 2013. "How much do Workers Search?," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 249-277, May.
  9. Wolthoff, Ronald P., 2011. "It's About Time: Implications of the Period Length in an Equilibrium Job Search Model," IZA Discussion Papers 6002, Institute for the Study of Labor (IZA).
  10. Jose Luis Moraga-Gonzalez & Zsolt Sandor & Matthijs R. Wildenbeest, 2008. "Nonparametric Estimation of the Costs of Non-Sequential Search," Tinbergen Institute Discussion Papers 07-102/1, Tinbergen Institute.

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