Cyclicality and the Labor Market for Economists
Craig A. Gallet
California State University, Sacramento - Department of Economics
John A. List
University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
Peter F. Orazem
Iowa State University - Department of Economics; Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 1302
Using a unique sample of new Ph.D. economists in 1987 and 1997, we examine how job seekers and their employers alter their search strategies in strong versus weak markets. The 1987 academic market was strong while the 1997 market was much weaker. A multimarket theory of optimal search suggests that job seekers will respond to a weakening market by lowering their reservation utility. This in turn affects their search strategies at the extensive margin (which markets to enter) and the intensive margin (how many applications to submit per market). Meanwhile, employers respond to the weakening market by raising their hiring standards. The combination of strategies on the supply and demand sides suggest that high quality applicants will obtain an increased share of academic interviews in weak markets while applicants from weaker schools will increasingly secure interviews outside of the academic market. Empirical results show that in the bust market, graduates of elite schools shifted their search strategies to include weaker academic institutions, while graduates of lower ranked schools shifted their applications away from academia and toward the business sector. In bust conditions, academic institutions increasingly concentrate their interviews on elite school graduates, women and U.S. residents.
Number of Pages in PDF File: 44
Keywords: search, PhD labor market, applications, interviews, visits, offers, boom and bust, academia, government, business
JEL Classification: J44, J60working papers series
Date posted: September 16, 2004
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