Testing the Importance of Search Frictions, Matching, and Reservation Prestige Through Randomized Experiments in Jordan

43 Pages Posted: 11 Oct 2014

See all articles by Matthew Groh

Matthew Groh

World Bank

David J. McKenzie

World Bank - Development Research Group (DECRG); IZA Institute of Labor Economics

Nour Shammout

University of Michigan at Ann Arbor; World Bank

Tara Vishwanath

World Bank - Economic Development Institute

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Abstract

Unemployment rates for tertiary-educated youth in Jordan are high, as is the duration of unemployment. Two randomized experiments in Jordan were used to test different theories that may explain this phenomenon. The first experiment tests the role of search and matching frictions by providing firms and job candidates with an intensive screening and matching service based on educational backgrounds and psychometric assessments. Although over 1,000 matches were made, youth rejected the opportunity to even have an interview in 28 percent of cases, and when a job offer was received, rejected this offer or quickly quit the job 83 percent of the time.A second experiment builds on the first by examining the willingness of educated, unemployed, youth to apply for jobs of varying levels of prestige. We find youth apply to only a small proportion of the job openings they are told about, with application rates higher for higher prestige jobs than lower prestige. Youth fail to show up for the majority of interviews scheduled for low prestige jobs. The results suggest that reservation prestige is an important factor underlying the unemployment of educated Jordanian youth.

Keywords: psychometrics, labor market matching, reservation prestige, youth unemployment, Jordan, randomized experiment

JEL Classification: O12, O15, J64, J08

Suggested Citation

Groh, Matthew and McKenzie, David John and Shammout, Nour and Vishwanath, Tara, Testing the Importance of Search Frictions, Matching, and Reservation Prestige Through Randomized Experiments in Jordan. IZA Discussion Paper No. 8518. Available at SSRN: https://ssrn.com/abstract=2508573

Matthew Groh (Contact Author)

World Bank ( email )

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David John McKenzie

World Bank - Development Research Group (DECRG) ( email )

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MSN3-311
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IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
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Nour Shammout

University of Michigan at Ann Arbor

500 S. State Street
Ann Arbor, MI 48109
United States

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Tara Vishwanath

World Bank - Economic Development Institute ( email )

1818 H Street
Washington, DC 20433
United States
202-473-1152 (Phone)

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