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Explaining the Increase in On-the-job Search

  • Skuterud, Mikal

Evidence from the Labour Force Survey (LFS) reveals that the percentage of employed workers searching for other jobs more than doubled in Canada between 1976 and 1995. Comparable evidence from the Current Population Survey (CPS), Panel Study of Income Dynamics (PSID), and National Longitudinal Survey (NLS) suggests that the U.S. experienced a remarkably similar upward trend in on-the-job search (OJS) over this period. Using U.S. data to supplement the Canadian data wherever possible, this paper attempts to explain this long-term, secular trend in Canadian OJS rates by performing decomposition and industry-level analyses, and by considering concomitant changes in employer-to-employer transition rates and the wage returns to job changing. The results from both countries suggest that an important part of the upward trend in OJS rates is not explained by compositional effects, including cohort effects. The OJS increase seems also to have occurred independently of rising job insecurity due to sector-specific demand shocks and trends in the dispersion of log wage residuals. The data are most consistent with a long-term decrease in search costs.

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Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 2005250e.

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Date of creation: 29 Apr 2005
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Handle: RePEc:stc:stcp3e:2005250e
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  1. Alan Manning & Ted To, 2002. "Oligopsony and Monopsonistic Competition in Labor Markets," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 155-174, Spring.
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