Job Search with Nonparticipation

53 Pages Posted: 29 Jul 2003

See all articles by Paul Frijters

Paul Frijters

Queensland University of Technology - School of Economics and Finance

Bas van der Klaauw

VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

Multiple version iconThere are 2 versions of this paper

Date Written: June 2003

Abstract

In a non-stationary job search model we allow unemployed workers to have a permanent option to leave the labour force. Transitions into nonparticipation occur when reservation wages drop below the utility of being nonparticipant. Taking account of these transitions allows the identification of the duration dependence in the job offer arrival rate and the wage offer distribution. We estimate the structural model with individual data from the German Socio-Economic Panel and use simulated maximum likelihood. The results show that the presence of significant negative duration dependence in the wage offer distribution causes reservation wages to decrease. The rate at which job offers arrive is constant over the unemployment duration. These findings provide micro-evidence that the job search environment of unemployed workers is non-stationary because of loss of skills.

Keywords: Endogenous nonparticipation, non-stationary job search, duration dependence, structural empirical analysis, simulated maximum likelihood, heterogeneity

JEL Classification: C15, C41, J64

Suggested Citation

Frijters, Paul and van der Klaauw, Bas, Job Search with Nonparticipation (June 2003). Available at SSRN: https://ssrn.com/abstract=428120

Paul Frijters

Queensland University of Technology - School of Economics and Finance ( email )

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HOME PAGE: http://www.bus.qut.edu.au/paulfrijters/index.jsp

Bas Van der Klaauw (Contact Author)

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6120 (Phone)
+31 20 444 6005 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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