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Liquidity Constraints, Unemployed Job Search and Labour Market Outcomes

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  • Ruud Gerards
  • Riccardo Welters

Abstract

Liquidity constraints prompt the unemployed to intensify their job search, but does that produce better labour market outcomes? Using longitudinal Australian data, we test the effect of objective proxy indicators of liquidity constraints on job search and concomitant labour market outcomes. We find that liquidity constraints, specifically their severe form ‘hardship’, intensify job search without improving short‐run employment outcomes or objective job quality (if a job is secured), whereas subjective job quality outcomes are worse. Moreover, we find evidence that the quit intention is higher and the concomitant medium‐run employment stability is lower for those who found jobs facing hardship.

Suggested Citation

  • Ruud Gerards & Riccardo Welters, 2020. "Liquidity Constraints, Unemployed Job Search and Labour Market Outcomes," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(3), pages 625-646, June.
    • Handle: RePEc:bla:obuest:v:82:y:2020:i:3:p:625-646
    DOI: 10.1111/obes.12345
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    Cited by:

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    2. Gerards, Ruud & Welters, Riccardo, 2022. "Job search in the presence of a stressor: Does financial hardship change the effectiveness of job search?," Journal of Economic Psychology, Elsevier, vol. 90(C).
    3. Deborah A. Cobb‐Clark & Lihini De Silva, 2021. "Participation, Unemployment, and Wages," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(4), pages 482-493, December.
    4. Min-Hyuk Cho & Chan-Goo Yi, 2022. "Adaptive Social Innovation Derived from Digital Economy and Its Impact on Society and Policy," Sustainability, MDPI, vol. 14(6), pages 1-20, March.

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