On the Ambiguity of Job Search

Chan, Y. T., & Yip, C. M. (2023). On the ambiguity of job search. Economic Inquiry, 61(4), 1006-1033.

59 Pages Posted: 9 Jan 2024

See all articles by Ying Tung Chan

Ying Tung Chan

Beijing Normal University - Zhuhai Campus

Chi Man Yip

Hong Kong Polytechnic University - School of Accounting and Finance

Date Written: December 13, 2023

Abstract

Who knows the underlying productivity distribution function? Interestingly, this ambiguous function is often referenced to make decisions including job creations, wage determinations, contract formulations, etc. To investigate how ambiguity shapes labour markets, we integrate ambiguity preferences into the Diamond-Mortensen-Pissarides (DMP) model. We find that ambiguity-averse job- and talent-hunters are conservative. Our quantitative analysis indicates that but for the ambiguity, the American unemployment rate would have increased in the postwar era. This paper generalizes the DMP model, enhances our understanding of the labour market, and calls for policies concerning labour market information.

Keywords: Ambiguity Aversion; Unemployment; Skewness Shocks

JEL Classification: D83, E24, E32, J64

Suggested Citation

Chan, Ying Tung and Yip, Chi Man, On the Ambiguity of Job Search (December 13, 2023). Chan, Y. T., & Yip, C. M. (2023). On the ambiguity of job search. Economic Inquiry, 61(4), 1006-1033., Available at SSRN: https://ssrn.com/abstract=4663267 or http://dx.doi.org/10.2139/ssrn.4663267

Ying Tung Chan

Beijing Normal University - Zhuhai Campus ( email )

18 Jinfeng Rd, Xiangzhou Qu
Guangdong Sheng
Zhuhai Shi
China

Chi Man Yip (Contact Author)

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Hung Hom
Kowloon
Hong Kong

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