Evidence on Job Search Models from a Survey of Unemployed Workers in Germany

The job finding rate of Unemployment Insurance (UI) recipients declines in the initial months of unemployment and then exhibits a spike at the benefit exhaustion point. A range of theoretical explanations have been proposed, but those are hard to disentangle using data on job finding alone. To bette...

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Veröffentlicht in:NBER Working Paper Series 2020-04
Hauptverfasser: Schmieder, Johannes F, Trenkle, Simon, DellaVigna, Stefano, Heining, Jörg
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Sprache:eng
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Zusammenfassung:The job finding rate of Unemployment Insurance (UI) recipients declines in the initial months of unemployment and then exhibits a spike at the benefit exhaustion point. A range of theoretical explanations have been proposed, but those are hard to disentangle using data on job finding alone. To better understand the underlying mechanisms, we conducted a large text-message-based survey of unemployed workers in Germany. We surveyed 6,349 UI recipients twice a week for 4 months about their job search effort. The panel structure allows us to observe how search effort evolves within individuals over the unemployment spell. We provide three key facts: 1) search effort is flat early on in the UI spell, 2) search effort exhibits an increase up to UI exhaustion and a decrease thereafter, 3) UI recipients do not appear to time job start dates to coincide with the UI exhaustion point. A standard search model with unobserved heterogeneity struggles to explain the second fact, and a model of storable offers is not consistent with the third fact. The patterns are well captured by a model of reference-dependent job search or by a model with duration dependence in search cost.
ISSN:0898-2937
DOI:10.3386/w27037