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Labor Market Prospects, Search Intensity and the Transition from College to Work

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  • Bas van der Klaauw

    ()
    (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

  • Aico van Vuuren

    ()
    (Faculty of Economics, Erasmus Universiteit Rotterdam)

  • Peter Berkhout

    ()
    (Faculty of Economics and Econometrics, Universiteit van Amsterdam)

Abstract

In this paper we develop a structural model for job search behavior of students entering the labor market. The model includes endogenous search effort and on-the-job search. Since students usually do not start a regular job before graduation but start job search earlier, our model is non stationary even if all structural parameters are constant. The model explains the common finding that a substantial share of individuals starts working immediately upon graduation. We estimate the model using a unique data set of individuals who completed undergraduate education in the Netherlands between 1995 and 2001. Our estimation results show that a 1 percent point decrease in unemployment rate increases wage offers with 3 percent, that there are substantial returns to work experience and that individuals devote less effort to job search than optimal. Employment rates at graduation could be increased from 40 percent to 65 percent if all individuals start job search 6 month prior to graduation.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-064/3.

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Date of creation: 07 Jun 2004
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Handle: RePEc:dgr:uvatin:20040064

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Web page: http://www.tinbergen.nl

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Keywords: business cycle; structural estimation; return to work experience;

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References

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  1. Robert H. Topel & Michael P. Ward, 1988. "Job Mobility and the Careers of Young Men," NBER Working Papers 2649, National Bureau of Economic Research, Inc.
  2. Eckstein, Zvi & Wolpin, Kenneth I, 1995. "Duration to First Job and the Return to Schooling: Estimates from a Search-Matching Model," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 62(2), pages 263-86, April.
  3. Mortensen, Dale T., 1987. "Job search and labor market analysis," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 15, pages 849-919 Elsevier.
  4. Bloemen, Hans G., 2001. "Job search, search intensity and labour market transitions : an empirical analysis," Serie Research Memoranda, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics 0037, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  5. Heckman, James J. & Lochner, Lance John & Todd, Petra E., 2003. "Fifty Years of Mincer Earnings Regressions," IZA Discussion Papers 775, Institute for the Study of Labor (IZA).
  6. Bent Jesper Christensen & Rasmus Lentz & Dale T. Mortensen & George R. Neumann & Axel Werwatz, 2003. "On the Job Search and the Wage Distribution," CAM Working Papers, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics 2004-09, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  7. Edwin Leuven & Hessel Oosterbeek & Bas van der Klaauw, 2010. "The Effect of Financial Rewards on Students' Achievement: Evidence from a Randomized Experiment," Journal of the European Economic Association, MIT Press, MIT Press, vol. 8(6), pages 1243-1265, December.
  8. Denis Fougère & Jacqueline Pradel & Muriel Roger, 1998. "The Influence of the State Employment Service on the Search Effort and on the Probability of Leaving Unemployment," Working Papers, Centre de Recherche en Economie et Statistique 98-36, Centre de Recherche en Economie et Statistique.
  9. Bowlus, Audra J & Kiefer, Nicholas M & Neumann, George R, 2001. "Equilibrium Search Models and the Transition from School to Work," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(2), pages 317-43, May.
  10. Ferrall, Christopher, 1997. "Unemployment Insurance Eligibility and the School-to-Work Transition in Canada and the United States," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 15(2), pages 115-29, April.
  11. James J. Heckman & Christopher J. Flinn, 1982. "New Methods for Analyzing Structural Models of Labor Force Dynamics," NBER Working Papers 0856, National Bureau of Economic Research, Inc.
  12. Coles, Melvyn G & Smith, Eric, 1994. "Marketplaces and Matching," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1048, C.E.P.R. Discussion Papers.
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Cited by:
  1. Paul Frijters & Deborah Cobb-Clark & Guyonne Kalbzx, 2004. "Do You Need a Job to Find a Job," Paul Frijters Discussion Papers, School of Economics and Finance, Queensland University of Technology 2004-3, School of Economics and Finance, Queensland University of Technology.
  2. Hägglund, Pathric, 2006. "Are there pre-programme effects of Swedish active labour market policies? Evidence from three randomised experiments," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2006:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  3. Pieter A. Gautier & Jose Luis Moraga-Gonzalez & Ronald P. Wolthoff, 2007. "Structural Estimation of Search Intensity: Do Non-Employed Workers Search Enough?," Tinbergen Institute Discussion Papers, Tinbergen Institute 07-071/3, Tinbergen Institute.
  4. Fougère, Denis & Pradel, Jacqueline & Roger, Muriel, 2009. "Does the public employment service affect search effort and outcomes?," European Economic Review, Elsevier, Elsevier, vol. 53(7), pages 846-869, October.
  5. Fougère, Denis & Pradel, Jacqueline & Roger, Muriel, 2005. "Does Job-Search Assistance Affect Search Effort and Outcomes? A Microeconometric Analysis of Public versus Private Search Methods," IZA Discussion Papers 1825, Institute for the Study of Labor (IZA).
  6. Aurora Galego & António Caleiro, 2011. "Understanding the transition to work for first degree university graduates in Portugal," Notas Económicas, Faculdade de Economia, Universidade de Coimbra, Faculdade de Economia, Universidade de Coimbra, issue 33, pages 44-61, June.
  7. 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, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne wp2004n13, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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