Time Preferences and Job Search: Evidence from France
AbstractIncreasing impatience reduces search efforts of unemployed job seekers and therefore decreases the exit rate from unemployment. Also, impatience reduces reservation wage and increases the exit rate. To determine the overall effect of impatience on the exit rate from unemployment, we distinguish between exponential and hyperbolic time preferences. Search effort dominates the reservation wage and decreases the exit rate from unemployment if individuals have hyperbolic, rather than exponential, preferences. Using the French sample of the European Household Panel Survey, we found that search effort has a strong effect on the duration of unemployment, whereas the reservation wage is not significant. This result shows that the job seekers have hyperbolic preferences. Hyperbolic preferences affect problems associated with job search and policies aimed at reducing unemployment.
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Bibliographic InfoPaper provided by HAL in its series Post-Print with number halshs-00451621.
Date of creation: 2009
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Publication status: Published, Labour, 2009, 23, 3, pp. 535-558
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00451621/en/
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Time preference; Hyperbolic discounting; job search;
Other versions of this item:
- Bassem Ben Halima & Mohamed Ali Ben Halima, 2009. "Time Preferences and Job Search: Evidence from France," LABOUR, CEIS, vol. 23(3), pages 535-558, 09.
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