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A structural analysis of job search methods and subsequent wages

Author

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  • Koning, Pierre

    (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)

  • Berg, Gerard J. van den
  • Ridder, Geert

Abstract

In most studies on individual labor market transitions, the search process leading to job offers is a black box. In this paper we specify and estimate a search model that distinguishes between formal (applications) and informal (referrals) search methods. Job offers can be obtained by either method, and the corresponding wage offer distributions are allowed to differ. The model allows for search during unemployment as well as search on the job. We conclude that although the method by which jobs are found varies considerably with education and occupation, the use of a particular search method does not result in a higher wage. Moreover, individuals who have an advantage in informal search do not find a job more rapidly, which casts doubt on the hypothesis that the search method is freely chosen by the searcher by comparing costs and returns.

Suggested Citation

  • Koning, Pierre & Berg, Gerard J. van den & Ridder, Geert, 1997. "A structural analysis of job search methods and subsequent wages," Serie Research Memoranda 0036, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  • Handle: RePEc:vua:wpaper:1997-36
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    File URL: http://degree.ubvu.vu.nl/repec/vua/wpaper/pdf/19970036.pdf
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    References listed on IDEAS

    as
    1. van den Berg, Gerard J, 1994. "The Effects of Changes of the Job Offer Arrival Rate on the Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 478-498, July.
    2. repec:adr:anecst:y:1991:i:20-21 is not listed on IDEAS
    3. van den Berg, Gerard J, 1990. "Search Behaviour, Transitions to Nonparticipation and the Duration of Unemployment," Economic Journal, Royal Economic Society, vol. 100(402), pages 842-865, September.
    4. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366.
    5. Joop Hartog & Hans Van Ophem, 1991. "Wages and Measurement Errors," Annals of Economics and Statistics, GENES, issue 20-21, pages 243-256.
    6. Mortensen, D. T. & Vishwanath, T., 1995. "Personal contacts and earnings: It is who you know!," Labour Economics, Elsevier, vol. 2(1), pages 103-104, March.
    7. Blau, David M & Robins, Philip K, 1990. "Job Search Outcomes for the Employed and Unemployed," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 637-655, June.
    8. Gerard J. van den Berg, 1990. "Nonstationarity in Job Search Theory," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 255-277.
    9. C, Bontemps & Jean-Marc Robin & G, Van Den Berg, 1997. "Equilibrium Search with Productivity Dispersion : Theory and Estimation," Working Papers 97-09, Center for Research in Economics and Statistics.
    10. repec:adr:anecst:y:1991:i:20-21:p:11 is not listed on IDEAS
    11. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-1418, December.
    12. Albrecht, James W. & Holmlund, Bertil & Lang, Harald, 1991. "Comparative statics in dynamic programming models with an application to job search," Journal of Economic Dynamics and Control, Elsevier, vol. 15(4), pages 755-769, October.
    13. Lindeboom, Maarten & van Ours, Jan C & Renes, Gusta, 1994. "Matching Employers and Workers: An Empirical Analysis on the Effectiveness of Search," Oxford Economic Papers, Oxford University Press, vol. 46(1), pages 45-67, January.
    14. Flinn, C. & Heckman, J., 1982. "New methods for analyzing structural models of labor force dynamics," Journal of Econometrics, Elsevier, vol. 18(1), pages 115-168, January.
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    Citations

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    Cited by:

    1. Fougère, Denis & Pradel, Jacqueline & Roger, Muriel, 2009. "Does the public employment service affect search effort and outcomes?," European Economic Review, Elsevier, vol. 53(7), pages 846-869, October.
    2. van der Klaauw, B. & van Ours, J.C., 1999. "Labor Supply and Matching Rates for Welfare Recipients : An Analysis Using Neighborhood Characterisitics," Discussion Paper 1999-105, Tilburg University, Center for Economic Research.
    3. Arceo-Gómez, Eva Olimpia, 2012. "Job Search, Networks, and Labor Market Performance of Immigrants," MPRA Paper 44533, University Library of Munich, Germany.
    4. Krug, Gerhard & Rebien, Martina, 2011. "Job search via social networks : An analysis of monetary and non-monetary returns for low-skilled unemployed," IAB Discussion Paper 201123, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. repec:iza:izadps:102 is not listed on IDEAS
    6. Marco Caliendo & Ricarda Schmidl & Arne Uhlendorff, 2011. "Social networks, job search methods and reservation wages: evidence for Germany," International Journal of Manpower, Emerald Group Publishing, vol. 32(7), pages 796-824, October.
    7. Santos, Miguel, 2010. "From Training to Labour Market. Holocletic Model," MPRA Paper 26617, University Library of Munich, Germany.
    8. Bechara, Peggy & Eilers, Lea & Paloyo, Alfredo R., 2015. "In Good Company – Neighborhood Quality and Female Employment," Ruhr Economic Papers 535, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Markova Kseniya & Roshchin Sergey, "undated". "Choice among Different Job Search Channels. The Evidence from Russian Labor Market," EERC Working Paper Series 04-05e, EERC Research Network, Russia and CIS.
    10. Eva Arceo, 2010. "Job Search, Social Interactions and Labor Market Performance of Low-Skilled Immigrants," Working papers DTE 489, CIDE, División de Economía.
    11. Fougère, Denis & Pradel, Jacqueline & Roger, Muriel, 2005. "Does Job-Search Assistance Affect Search Effort and Outcomes? A Microeconometric Analysis of Public versus Private Search Methods," IZA Discussion Papers 1825, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    job search; search methods; wages; individual labor market transitions;

    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

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