Structural Estimation of Search Intensity: Do Non-Employed Workers Search Enough?

IZA Discussion Paper No. 3045

Tinbergen Institute Discussion Paper No. 07-071/3

60 Pages Posted: 18 Sep 2007

See all articles by Pieter A. Gautier

Pieter A. Gautier

Free University of Amsterdam; Tinbergen Institute Amsterdam (TIA); IZA Institute of Labor Economics

José L. Moraga-González

VU University Amsterdam; University of Groningen

Ronald P. Wolthoff

University of Toronto - Department of Economics; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 2, 2007

Abstract

We present a structural framework for the evaluation of public policies intended to increase job search intensity. Most of the literature defines search intensity as a scalar that influences the arrival rate of job offers; here we treat it as the number of job applications that workers send out. The wage distribution and job search intensities are simultaneously determined in market equilibrium. We structurally estimate the search cost distribution, the implied matching probabilities, the productivity of a match, and the flow value of non-labor market time; the estimates are then used to derive the socially optimal distribution of job search intensities. From a social point of view, too few workers participate in the labor market while some unemployed search too much. The low participation rate reflects a standard hold-up problem and the excess number of applications result is due to rent seeking behavior. Sizable welfare gains (15% to 20%) can be realized by simultaneously opening more vacancies and increasing participation. A modest binding minimum wage or conditioning UI benefits on applying for at least one job per period, increases welfare.

Keywords: job search, search costs, labor market frictions, wage dispersion, welfare, structural estimation

JEL Classification: J64, J31, J21, E24, C14

Suggested Citation

Gautier, Pieter A. and Moraga-Gonzalez, Jose Luis and Wolthoff, Ronald P., Structural Estimation of Search Intensity: Do Non-Employed Workers Search Enough? (September 2, 2007). IZA Discussion Paper No. 3045, Tinbergen Institute Discussion Paper No. 07-071/3, Available at SSRN: https://ssrn.com/abstract=1015226

Pieter A. Gautier (Contact Author)

Free University of Amsterdam ( email )

Amsterdam, ND North Holland
Netherlands

Tinbergen Institute Amsterdam (TIA) ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jose Luis Moraga-Gonzalez

VU University Amsterdam ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands

HOME PAGE: http://www.tinbergen.nl/~moraga/

University of Groningen

P.O. Box 800
9700 AV Groningen, Groningen 9700 AV
Netherlands

Ronald P. Wolthoff

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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