Job-search Methods, Neighbourhood Effects and the Youth Labour Market

Survey data suggest that unemployed teenagers look for work in ways that differ significantly from the ways which proved successful for teenagers who found work. This paper examines what factors affect the way teenagers look for work in order to explain why we observe this behaviour. We find that the single most important characteristic for explaining the job-search method choices of Australian teenagers is whether they receive unemployment benefits. Receiving benefits increases the probability of teenagers using the government employment agency as the main job-search method by almost 20 percentage points, and decreases their probability of using direct methods (such as contacting employers or friends and relatives) or newspapers by around 10 percentage points each. Personal characteristics and family background are also important for understanding the job-search methods chosen by unemployed teenagers. Another interesting finding is that the local environment, especially the state of the local labour market, is important for explaining job-search method choice. Higher local unemployment rates decrease the probability that an unemployed teenager will use direct search methods, and increase the probability that they will use the government employment agency. These results may help to explain the recently documented evidence that unemployment has become increasingly concentrated in low-socioeconomic-status neighbourhoods (Gregory and Hunter 1995).