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Job Applications and Labor Market Flows

Author

Listed:
  • Serdar Birinci
  • Kurt See
  • Shu Lin Wee

    ()

Abstract

Improvements in search technology have led to an increase in worker applications over time. Concomitantly, unemployment inflow rates have declined sharply, with no long-run change in job-finding rates. To explain these trends, we introduce a search model with multiple applications and costly information acquisition. When workers send more applications, the model predicts that firms invest more in finding good matches, leading to fewer separations, while workers become choosier about which offers they accept, mitigating the rise in job-finding rates. Quantitatively, the model replicates the empirical trends in unemployment flows both in the aggregate and across groups. To validate our model's mechanisms, we present new facts on the variation in job offers, acceptance rates, and reservation wages over time. Importantly, it is the model's ability to reproduce these empirical changes that enables it to generate the observed trends in unemployment flows.

Suggested Citation

  • Serdar Birinci & Kurt See & Shu Lin Wee, 2020. "Job Applications and Labor Market Flows," Working Papers 2020-023, Federal Reserve Bank of St. Louis, revised Dec 2020.
  • Handle: RePEc:fip:fedlwp:88525
    DOI: 10.20955/wp.2020.023
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    More about this item

    Keywords

    Costly Information; Unemployment; Multiple Applications; Inflows; Outflows;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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