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Cyclicality and the Labor Market

Author

Listed:
  • Gallet, Craig A.

    () (California State University, Sacramento)

  • List, John A.

    () (University of Chicago)

  • Orazem, Peter F.

    () (Iowa State University)

Abstract

Using a unique sample of new Ph.D. economists in 1987 and 1997, we examine how job seekers and their employers alter their search strategies in strong versus weak markets. The 1987 academic market was strong while the 1997 market was much weaker. A multimarket theory of optimal search suggests that job seekers will respond to a weakening market by lowering their reservation utility. This in turn affects their search strategies at the extensive margin (which markets to enter) and the intensive margin (how many applications to submit per market). Meanwhile, employers respond to the weakening market by raising their hiring standards. The combination of strategies on the supply and demand sides suggest that high quality applicants will obtain an increased share of academic interviews in weak markets while applicants from weaker schools will increasingly secure interviews outside of the academic market. Empirical results show that in the bust market, graduates of elite schools shifted their search strategies to include weaker academic institutions, while graduates of lower ranked schools shifted their applications away from academia and toward the business sector. In bust conditions, academic institutions increasingly concentrate their interviews on elite school graduates, women and U.S. residents.

Suggested Citation

  • Gallet, Craig A. & List, John A. & Orazem, Peter F., 2004. "Cyclicality and the Labor Market," IZA Discussion Papers 1302, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp1302
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    References listed on IDEAS

    as
    1. John A. List, 2000. "Interview Scheduling Strategies of New Ph.D. Economists," The Journal of Economic Education, Taylor & Francis Journals, vol. 31(2), pages 191-201, June.
    2. Larry D. Singell & Joe A. Stone, 1993. "Gender Differences In Ph.D. Economists' Careers," Contemporary Economic Policy, Western Economic Association International, vol. 11(4), pages 95-106, October.
    3. John J. Siegfried, 2017. "Report of the Director: Job Openings for Economists," American Economic Review, American Economic Association, vol. 107(5), pages 749-751, May.
    4. John J. Siegfried, 2017. "Report of the Director: Job Openings for Economists," American Economic Review, American Economic Association, vol. 107(5), pages 749-751, May.
    5. Carson, Richard & Navarro, Peter, 1988. "A Seller's (and Buyer's) Guide to the Job Market for Beginning Academic Economists," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 137-148, Spring.
    6. John J. Siegfried, 2017. "Report of the Director: Job Openings for Economists," American Economic Review, American Economic Association, vol. 107(5), pages 749-751, May.
    7. Broder, Ivy E, 1993. "Professional Achievements and Gender Differences among Academic Economists," Economic Inquiry, Western Economic Association International, vol. 31(1), pages 116-127, January.
    8. John J. Siegfried, 2017. "Report of the Director: Job Openings for Economists," American Economic Review, American Economic Association, vol. 107(5), pages 749-751, May.
    9. repec:aea:aecrev:v:107:y:2017:i:5:p:749-51 is not listed on IDEAS
    10. Formby, John P & Gunther, William D & Sakano, Ryoichi, 1993. "Entry Level Salaries of Academic Economists: Does Gender or Age Matter?," Economic Inquiry, Western Economic Association International, vol. 31(1), pages 128-138, January.
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    12. Shulamit B. Kahn, 1995. "Women in the Economics Profession," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 193-206, Fall.
    13. John J. Siegfried, 2017. "Report of the Director: Job Openings for Economists," American Economic Review, American Economic Association, vol. 107(5), pages 749-751, May.
    14. John J. Siegfried & Wendy A. Stock, 1999. "The Labor Market for New Ph.D. Economists," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 115-134, Summer.
    15. John Cawley, 2001. "A Guide (and Advice) for Economists on the U. S. Junior Academic Job Market," Labor and Demography 0109001, EconWPA, revised 02 Sep 2002.
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    More about this item

    Keywords

    boom and bust; search; offers; visits; interviews; applications; PhD labor market; business; academia; government;

    JEL classification:

    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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