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Job Search Behaviour and Time Preferences: Evidence from the Netherlands

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  • Thomas van Huizen

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  • Janneke Plantenga

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    Abstract

    This paper examines theoretically and empirically the effects of time preferences on job search behaviour of the unemployed. The aim of the study is to test the exponential versus the hyperbolic discounting model within a labour market context. The theoretical relations between patience on the one hand and job search intensity, reservation wages and the exit rate to employment on the other hand depend on whether exponential or hyperbolic discounting is assumed. Assessing these relations empirically therefore provides a test of the two alternative models of discounting. We make use of the DNB Household Survey, a large Dutch longitudinal survey containing various indicators of job search effort, reservation wages and detailed information on individual time preferences. The results are in line with the hyperbolic discounting model.

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    Bibliographic Info

    Paper provided by Utrecht School of Economics in its series Working Papers with number 13-03.

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    Length: 33 pages
    Date of creation: Mar 2013
    Date of revision:
    Handle: RePEc:use:tkiwps:1303

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    Related research

    Keywords: time preferences; unemployment; job search; hyperbolic discounting;

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    References

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    1. Bloemen, Hans G., 2003. "Job search, search intensity and labour market transitions : an empirical analysis," Serie Research Memoranda 0026, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    2. M. Daniele Paserman, 2004. "Job Search and Hyperbolic Discounting: Structural Estimation and Policy Evaluation," 2004 Meeting Papers 99, Society for Economic Dynamics.
    3. Stefano DellaVigna, 2007. "Psychology and Economics: Evidence from the Field," NBER Working Papers 13420, National Bureau of Economic Research, Inc.
    4. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    5. van der Klaauw, Bas & van Vuuren, Aico, 2010. "Job search and academic achievement," European Economic Review, Elsevier, vol. 54(2), pages 294-316, February.
    6. O'Donoghue, Ted & Rabin, Matthew, 1997. "Doing It Now or Later," Department of Economics, Working Paper Series qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    7. Ted O' Donoghue and Matthew Rabin., 2000. "Choice and Procrastination," Economics Working Papers E00-281, University of California at Berkeley.
    8. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
    9. Bassem Ben Halima & Mohamed Ben Halima, 2009. "Time Preferences and Job Search: Evidence from France," Post-Print halshs-00451621, HAL.
    10. Alan B. Krueger & Andreas Mueller, 2008. "Job Search and Unemployment Insurance: New Evidence from Time Use Data," Working Papers 1070, Princeton University, Department of Economics, Industrial Relations Section..
    11. Stefano DellaVigna & M. Daniele Paserman, 2005. "Job Search and Impatience," Journal of Labor Economics, University of Chicago Press, vol. 23(3), pages 527-588, July.
    12. Webley, Paul & Nyhus, Ellen K., 2006. "Parents' influence on children's future orientation and saving," Journal of Economic Psychology, Elsevier, vol. 27(1), pages 140-164, February.
    13. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
    14. Borghans, Lex & Golsteyn, Bart H.H., 2006. "Time discounting and the body mass index: Evidence from the Netherlands," Economics & Human Biology, Elsevier, vol. 4(1), pages 39-61, January.
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