Cyclicality and the Labor Market for Economists

44 Pages Posted: 16 Sep 2004

See all articles by Craig A. Gallet

Craig A. Gallet

California State University, Sacramento - Department of Economics

John A. List

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Peter F. Orazem

Iowa State University and IZA; IZA Institute of Labor Economics

Date Written: September 2004

Abstract

Using a unique sample of new Ph.D. economists in 1987 and 1997, we examine how job seekers and their employers alter their search strategies in strong versus weak markets. The 1987 academic market was strong while the 1997 market was much weaker. A multimarket theory of optimal search suggests that job seekers will respond to a weakening market by lowering their reservation utility. This in turn affects their search strategies at the extensive margin (which markets to enter) and the intensive margin (how many applications to submit per market). Meanwhile, employers respond to the weakening market by raising their hiring standards. The combination of strategies on the supply and demand sides suggest that high quality applicants will obtain an increased share of academic interviews in weak markets while applicants from weaker schools will increasingly secure interviews outside of the academic market. Empirical results show that in the bust market, graduates of elite schools shifted their search strategies to include weaker academic institutions, while graduates of lower ranked schools shifted their applications away from academia and toward the business sector. In bust conditions, academic institutions increasingly concentrate their interviews on elite school graduates, women and U.S. residents.

Keywords: search, PhD labor market, applications, interviews, visits, offers, boom and bust, academia, government, business

JEL Classification: J44, J60

Suggested Citation

Gallet, Craig A. and List, John A. and Orazem, Peter Francis, Cyclicality and the Labor Market for Economists (September 2004). IZA Discussion Paper No. 1302. Available at SSRN: https://ssrn.com/abstract=591162

Craig A. Gallet

California State University, Sacramento - Department of Economics ( email )

6000 J Street
Sacramento, CA 95819-6082
United States

John A. List

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

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

Peter Francis Orazem (Contact Author)

Iowa State University and IZA ( email )

260 Heady Hall
Ames, IA 50011
United States
515-294-8656/515-294-7740 (Phone)
515-294-0221 (Fax)

IZA Institute of Labor Economics

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

Register to save articles to
your library

Register

Paper statistics

Downloads
76
Abstract Views
1,549
rank
316,650
PlumX Metrics