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Joint-Search Theory: New Opportunities and New Frictions

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  • Bulent Guler
  • Fatih Guvenen
  • Giovanni L. Violante

Abstract

Search theory routinely assumes that decisions about the acceptance/rejection of job offers (and, hence, about labor market movements between jobs or across employment states) are made by individuals acting in isolation. In reality, the vast majority of workers are somewhat tied to their partners--in couples and families--and decisions are made jointly. This paper studies, from a theoretical viewpoint, the joint job-search and location problem of a household formed by a couple (e.g., husband and wife) who perfectly pools income. The objective of the exercise, very much in the spirit of standard search theory, is to characterize the reservation wage behavior of the couple and compare it to the single-agent search model in order to understand the ramifications of partnerships for individual labor market outcomes and wage dynamics. We focus on two main cases. First, when couples are risk averse and pool income, joint search yields new opportunities--similar to on-the-job search--relative to the single-agent search. Second, when the two spouses in a couple face job offers from multiple locations and a cost of living apart, joint-search features new frictions and can lead to significantly worse outcomes than single-agent search.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15011.

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Date of creation: May 2009
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Publication status: published as Guler, Bulent & Guvenen, Fatih & Violante, Giovanni L., 2012. "Joint-search theory: New opportunities and new frictions," Journal of Monetary Economics, Elsevier, vol. 59(4), pages 352-369.
Handle: RePEc:nbr:nberwo:15011

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Cited by:
  1. Ek Spector, Susanne & Holmlund, Bertil, 2010. "Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance," IZA Discussion Papers 4701, Institute for the Study of Labor (IZA).
  2. Stefania Marcassa, 2012. "Unemployment Duration of Spouses: Evidence From France," THEMA Working Papers, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise 2012-31, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  3. Greg Kaplan & Sam Schulhofer-Wohl, 2012. "Understanding the long-run decline in interstate migration," Working Papers, Federal Reserve Bank of Minneapolis 697, Federal Reserve Bank of Minneapolis.
  4. Willemijn Van Der Straaten & Jan Rouwendal, 2011. "Why are the commuting distances of power couples so short? An analysis of the location preferences of households," ERSA conference papers ersa10p816, European Regional Science Association.
  5. Mankart, Jochen & Oikonomou, Rigas, 2012. "Household Search and the Aggregate Labor Market," Economics Working Paper Series, University of St. Gallen, School of Economics and Political Science 1225, University of St. Gallen, School of Economics and Political Science.
  6. Rodolfo E. Manuelli & Adrian Peralta-Alva, 2011. ""Frictions in financial and labor markets": a summary of the 35th Annual Economic Policy Conference," Review, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, issue July, pages 273-292.
  7. Luca Flabbi and James Mabli, 2012. "Household Search or Individual Search: Does It Matter? Evidence from Lifetime Inequality Estimates," Working Papers, Georgetown University, Department of Economics gueconwpa~12-12-03, Georgetown University, Department of Economics.
  8. Zaharieva, Anna, 2013. "Social welfare and wage inequality in search equilibrium with personal contacts," Labour Economics, Elsevier, Elsevier, vol. 23(C), pages 107-121.
  9. Martin Junge & Martin D. Munk & Panu Poutvaara, 2013. "International Migration of Couples," Norface Discussion Paper Series, Norface Research Programme on Migration, Department of Economics, University College London 2013018, Norface Research Programme on Migration, Department of Economics, University College London.
  10. Jan Eeckhout, 2012. "Matching Information," 2012 Meeting Papers, Society for Economic Dynamics 835, Society for Economic Dynamics.
  11. Zhou, Jidong, 2011. "Multiproduct search," MPRA Paper 37139, University Library of Munich, Germany.
  12. Andrew Shephard, 2011. "Equilibrium Search and Tax Credit Reform," Working Papers, Princeton University, Department of Economics, Center for Economic Policy Studies. 1336, Princeton University, Department of Economics, Center for Economic Policy Studies..
  13. Bulent Guler, 2013. "Dual Income Couples and Interstate Migration," 2013 Meeting Papers, Society for Economic Dynamics 898, Society for Economic Dynamics.
  14. Sekyu Choi, 2013. "On Households and Unemployment," 2013 Meeting Papers, Society for Economic Dynamics 992, Society for Economic Dynamics.

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