Job Search and Impatience

64 Pages Posted: 27 Oct 2004 Last revised: 13 Aug 2010

See all articles by Stefano DellaVigna

Stefano DellaVigna

University of California, Berkeley; National Bureau of Economic Research (NBER)

M. Daniele Paserman

Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: October 2004

Abstract

How does impatience affect job search? More impatient workers search less intensively and set a lower reservation wage. The effect on the exit rate from unemployment is unclear. In this paper we show that, if agents have exponential time preferences, the reservation wage effect dominates for sufficiently patient individuals, so increases in impatience lead to higher exit rates. The opposite is true for agents with hyperbolic time preferences: more impatient workers search less and exit unemployment later. Using two large longitudinal data sets, we find that various measures of impatience are negatively correlated with search effort and the exit rate from unemployment, and are orthogonal to reservation wages. Overall, impatience has a large effect on job search outcomes in the direction predicted by the hyperbolic discounting model.

Suggested Citation

DellaVigna, Stefano and Paserman, M. Daniele, Job Search and Impatience (October 2004). NBER Working Paper No. w10837, Available at SSRN: https://ssrn.com/abstract=611322

Stefano DellaVigna (Contact Author)

University of California, Berkeley ( email )

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M. Daniele Paserman

Hebrew University of Jerusalem - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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