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Search Intensity, Cost of Living and Local Labor Markets in Britain

  • Patacchini, Eleonora

    ()

    (Cornell University)

  • Zenou, Yves

    ()

    (Stockholm University)

A model is considered in which optimal search intensity is a result of a tradeoff between short-run losses due to higher search costs (more interviews, commuting…) and long-run gains due to a higher chance of finding a job. We show that this optimal search intensity is higher in areas characterized by larger cost of living and/or higher labor market tightness. We then test this model using county-level data in England for the period 1991-2000. As predicted by the theoretical model, both the (county) cost of living and the (county) labor market tightness are found to have a positive and significant effect on the (county) search intensity. We also find positive spatial correlation between counties (i.e. clustering of counties with similar level of search intensity) and strong spatial spillover effects.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 772.

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Length: 36 pages
Date of creation: May 2003
Date of revision:
Publication status: published in: Regional Science and Urban Economics, 2006, 36(2), 227-248
Handle: RePEc:iza:izadps:dp772
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  1. Alan Manning, 2003. "The real thin theory: monopsony in modern labour markets," LSE Research Online Documents on Economics 20050, London School of Economics and Political Science, LSE Library.
  2. Gavin Cameron & John Muellbauer, 2001. "Earnings, unemployment, and housing in Britain," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 203-220.
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  17. Ortega, Javier, 2000. "Pareto-Improving Immigration in an Economy with Equilibrium Unemployment," Economic Journal, Royal Economic Society, vol. 110(460), pages 92-112, January.
  18. Coulson, N Edward & Laing, Derek & Wang, Ping, 2001. "Spatial Mismatch in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 949-72, October.
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