Job-Search Methods and Labor Market Transitions in a Segmented Economy

This paper examines the impact of job search methods on the output of the job search process in a segmented labor market. Theoretical models of job search, like the widely used search approach, generally contain only one parameter capturing all possible factors affecting the efficiency of search. Additionally, usually only two occupational states are considered: 'working' or 'searching'. In most countries though the labor market is segmented in formal and informal employment and self- employment. I argue that vacancies in these different labor market sectors are promoted via different channels and that part of the labor market segmentation originates from lack of information on vacancies in the formal sector. To evaluate the different search methods, I estimate their impact on exit rates of unemployed Brazilian workers by using multinomial logit models.