Job Search Behavior of the Unemployed
Final Report Abstract
In this research project we analyze the transition process from unemployment to employment. Thereby we focus on the determinants of reservation wages and the type and intensity of job search as well as their impact on unemployment duration. Both components depend on factors like education, age, unemployment benefits and household composition. Next to these “classical” variables the process may depend on factors like personality traits or social networks, which are usually unobservable for the econometrician. In addition to administrative the analysis is based on unique survey data containing a large inflow sample of unemployed. This data set allows us to observe individual job search intensity, reservation wages and job offers at different points in time as well as realized transitions into employment. Based on administrative data, we use a sharp discontinuity in the maximum benefit duration to identify the effect of extended duration on unemployment duration and post-unemployment outcomes. We find a spike in the re-employment hazard for the unemployed workers with shorter benefit duration. We also show that those unemployed who obtain jobs close to and after the time when benefits are exhausted are significantly more likely to exit subsequent employment and receive lower wages. Based on survey data we estimate the impact of locus of control, i.e., the extent to which a person believes that future outcomes are determined by his or her own actions as opposed to external factors, on job search behavior. We find evidence that individuals with an internal locus of control search more and that individuals who believe that their future outcomes are determined by external factors have lower reservation wages. Job search theory suggests that individuals with larger networks use informal search channels more, substitute from formal towards informal search and have higher reservation wages. We analyze these relations using our survey data and show that individuals with larger networks use informal search channels more often and shift from formal to informal search. We find that informal search is mainly considered a substitute for passive, less cost intensive search channels. In addition to that we find evidence for a positive relationship between the network size and reservation wages. Labor market programs may affect unemployed individuals’ behavior before they enroll. Such ex ante effects are hard to identify without model assumptions. We develop a novel method that relates selfreported perceived treatment rates and job-search behavioral outcomes to each other. To deal with effect heterogeneity and selectivity, the effects of interest are estimated by propensity score matching. We apply the method to the German ALMP system, using a novel data set including self-reported assessments of the variables of interest as well as an unusually detailed amount of information on behavior, attitudes, and past outcomes. We find that the system generates a negative ex ante effect on the reservation wage and a positive effect on search effort.
Publications
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(2009): Benefit Duration, Unemployment Duration and Job Match Quality: A Regression-Discontinuity Approach, IZA Discussion Paper No. 4670
Caliendo, Marco, Konstantinos Tatsiramos, and Arne Uhlendorff
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(2009): The Effect of Active Labor Market Programs on Not-Yet Treated Unemployed Individuals, Journal of the European Economic Association, 7(2-3), 606-616
Bergemann, Annette, Gerard van den Berg, and Marco Caliendo
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(2010): Locus of Control and Job Search Strategies, IZA Discussion Paper No. 4750
Caliendo, Marco, Deborah Cobb-Clark, and Arne Uhlendorff
