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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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Bibliographic Info

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. Wolthoff, Ronald P., 2010. "Applications and Interviews: A Structural Analysis of Two-Sided Simultaneous Search," IZA Discussion Papers 5416, Institute for the Study of Labor (IZA).
  2. 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).
  3. Ronald Wolthoff, 2009. "Ex Ante and Ex Post Inefficiency in Search and Matching Models," 2009 Meeting Papers 774, Society for Economic Dynamics.
  4. David Fuller, 2008. "Adverse Selection and Moral Hazard: Quanitative Implications for Unemployment Insurance," 2008 Meeting Papers 889, Society for Economic Dynamics.
  5. Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2011. "Frictional Wage Dispersion in Search Models: A Quantitative Assessment," American Economic Review, American Economic Association, vol. 101(7), pages 2873-98, December.
  6. David L. Fuller & Bryan Engelhardt, 2010. "Labor Force Participation and Pair-wise Efficient Contracts with Search and Bargaining," Working Papers 12005, Concordia University, Department of Economics, revised 20 Jan 2012.
  7. Ping Yan, 2013. "How much do Workers Search?," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 249-278, May.
  8. 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.
  9. 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.
  10. Stephen DeLoach & Mark Kurt, 2013. "Discouraging Workers: Estimating the Impacts of Macroeconomic Shocks on the Search Intensity of the Unemployed," Journal of Labor Research, Springer, vol. 34(4), pages 433-454, December.

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