What Can Explain the Hump-Shaped Job Search Intensities Over the Life-Cycle?
41 Pages Posted: 9 Mar 2021
Date Written: January 14, 2021
This paper explores the puzzling inverted U-shape job search profile for U.S. data. It is well established that the standard life-cycle incomplete market model is incapable of explaining this phenomenon because of the wealth effect. I argue two channels to explain the puzzle: (i) the resolution of perceived risks through Bayesian learning, and (ii) wealth accumulation in the incomplete market over the life-cycle. To support this, I empirically and analytically show that unemployed job seekers devote less efforts to find jobs under higher uncertainty and wealth.
JEL Classification: D52, D83, E21, J64
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