Search and Matching in Dense Labor Markets: Evidence fromTargeted and Realized Occupations of Job Seekers

This paper examines whether unemployed workers searching in dense urban labor markets are better able to realize their occupational search goals. We use linked employer–employee administrative data from Hungary that record theoccupation in which unemployed workers primarily seek work and compare these targets with their subsequent occupations. We find that workers searching in denser labor markets are more likely to find employment in their targeted occupation or in some closely related occupation. These results are robust to a rich set of control variables and alternative specifications. To address potential endogeneity concerns, we use historical data on population and railway infrastructure to construct instruments for contemporary employment density. Finally, examining the role of search targets in post-unemployment occupational mobility,we find that denser labor markets are associated with greater occupational continuity among workers who seek to return to their previous occupation, while those seeking to change occupations tend to move to occupations that are more similar to their previous ones in terms of skill requirements.