Locus of Control and Job Search Strategies
University of Potsdam; Institute for the Study of Labor (IZA)
Deborah A. Cobb-Clark
University of Melbourne - Melbourne Institute of Applied Economic and Social Research; Institute for the Study of Labor (IZA)
Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 4750
Standard job search theory assumes that unemployed individuals have perfect information about the effect of their search effort on the job offer arrival rate. In this paper, we present an alternative model which assumes instead that each individual has a subjective belief about the impact of his or her search effort on the rate at which job offers arrive. These beliefs depend in part on an individual's 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. We estimate the impact of locus of control on job search behavior using a novel panel data set of newly-unemployed individuals in Germany. Consistent with our theoretical predictions, 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.
Number of Pages in PDF File: 36
Keywords: job search behavior, search effort, reservation wage, locus of control, unemployment duration
JEL Classification: J64working papers series
Date posted: February 15, 2010
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