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Job Search with Nonparticipation

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Author Info
Frijters, Paul (RSSS, Australian National University)
van der Klaauw, Bas () (Free University Amsterdam, Tinbergen Institute, CEPR and IZA Bonn)

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Abstract

In a non-stationary job search model we allow unemployed workers to have a permanent option to leave the labor force. Transitions into nonparticipation occur when reservation wages drop below the utility of being nonparticipant. Taking account of these transitions allows the identification of duration dependence in the job offer arrival rate and the wage offer distribution. We estimate the structural model with individual data from the German Socio- Economic Panel and use simulated maximum likelihood. The results show that the presence of significant negative duration dependence in the wage offer distribution causes reservation wages to decrease. The rate at which job offers arrive is constant over the unemployment duration. These findings provide micro evidence that the job search environment of unemployed workers is non-stationary because of loss of skills.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1407.

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Length: 49 pages
Date of creation: Nov 2004
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Handle: RePEc:iza:izadps:dp1407

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Related research
Keywords: endogenous nonparticipation; non-stationary job search; duration;

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Find related papers by JEL classification:
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Statistical Simulation Methods

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References listed on IDEAS
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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    Other versions:
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    Other versions:
Full references

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. Armin Falk & David Huffman & Uwe Sunde, 2006. "Self-Confidence and Search," IZA Discussion Papers 2525, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Pieter A. Gautier & José Luis Moraga-González & Ronald P. Wolthoff, 2007. "Structural Estimation of Search Intensity: Do Non-Employed Workers Search Enough?," Tinbergen Institute Discussion Papers 07-071/3, Tinbergen Institute. [Downloadable!]
    Other versions:
  3. 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 wp2004n13, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  4. Lollivier, Stefan & Rioux, Laurence, 2005. "A Structural Non-Stationary Model of Job Search: Stigmatization of the Unemployed by Job Offers or Wage Offers?," CEPR Discussion Papers 5108, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Armin Falk & David Huffman & Uwe Sunde, 2006. "Do I Have What It Takes? Equilibrium Search with Type Uncertainty and Non-Participation," IZA Discussion Papers 2531, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Aico van Vuuren & Michiel van Leuvensteijn, 2007. "The impact of homeownership on unemployment in the Netherlands," CPB Discussion Papers 86, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  7. J. Ignacio García Pérez & Alfonso R Sánchez Martín, 2008. "Social Security and the search behaviour of workers approaching retirement," Working Papers 08.03, Universidad Pablo de Olavide, Department of Economics. [Downloadable!]
    Other versions:
  8. Sarah Brown & Karl Taylor, 2008. "Reservation Wages, Expected Wages and Labour Market Outcomes: Analysis of Individual Level Panel Data," Working Papers 2008008, The University of Sheffield, Department of Economics, revised Jul 2008. [Downloadable!]
  9. Haan, Peter & Prowse, Victoria L., 2009. "A Structural Approach to Estimating the Effect of Taxation on the Labor Market Dynamics of Older Workers," IZA Discussion Papers 4102, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  10. Broersma, Lourens & Butter, Frank A.G. den & Kock, Udo, 2003. "A Cointegration Model for Search Equilibrium Wage Formation," Serie Research Memoranda 0021, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics. [Downloadable!]
  11. José Ignacio García Pérez, 2003. "Non-stationary Job Search When Jobs Do Not Last Forever: A Structural Estimation to Evaluate Alternative Unemployment Insurance Systems," Economic Working Papers at Centro de Estudios Andaluces E2003/49, Centro de Estudios Andaluces. [Downloadable!]
  12. Michael Rosholm & Ott Toomet, 2005. "A Search Model of Discouragement," IZA Discussion Papers 1633, Institute for the Study of Labor (IZA). [Downloadable!]
  13. Deborah Cobb-Clark & Paul Frijters & Guyonne Kalb, 2005. "Do You Need a Job to Find a Job?," CEPR Discussion Papers 497, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
    Other versions:
  14. Frijters, Paul & van der Klaauw, Bas, 2004. "Job Search with Nonparticipation," IZA Discussion Papers 1407, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  15. Markus Pannenberg, 2007. "Risk Aversion and Reservation Wages," IZA Discussion Papers 2806, Institute for the Study of Labor (IZA). [Downloadable!]
  16. Lourens Broersma & F. A. G. den Butter & Udo Kock, 2004. "A Cointegration Model for Search Equilibrium Wage Formation," IMF Working Papers 04/92, International Monetary Fund. [Downloadable!]
    Other versions:
  17. Paul Frijters & Dirk Bezemer & Uwe Dulleck, 2005. "Contacts, Social Capital and Market Institutions - A Theory of Development," Paul Frijters Discussion Papers 2005-1, School of Economics and Finance, Queensland University of Technology. [Downloadable!]
    Other versions:
  18. Bergemann, Annette & van den Berg, Gerard J., 2008. "From Giving Birth to Paid Labor: The Effects of Adult Education for Prime-Aged Mothers," IZA Discussion Papers 3600, Institute for the Study of Labor (IZA). [Downloadable!]
  19. Peter Haan & Arne Uhlendorff, 2007. "Intertemporal Labor Supply and Involuntary Unemployment," IZA Discussion Papers 2888, Institute for the Study of Labor (IZA). [Downloadable!]
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