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

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Author Info
Pieter A. Gautier () (Vrije Universiteit Amsterdam, and CEPR)
José Luis Moraga-González () (University of Groningen)
Ronald P. Wolthoff () (Vrije Universiteit Amsterdam)

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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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Publisher Info
Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 07-071/3.

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Date of creation: 17 Sep 2007
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Handle: RePEc:dgr:uvatin:20070071

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Related research
Keywords: job search search costs labor market frictions wage dispersion welfare structural estimation

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Find related papers by JEL classification:
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods

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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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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. José Luis Moraga-González & Zsolt Sándor & Matthijs R. Wildenbeest, 2008. "Nonparametric Estimation of the Costs of Non-Sequential Search," Tinbergen Institute Discussion Papers 07-102/1, Tinbergen Institute. [Downloadable!]
    Other versions:
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