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Job Search and the Labor Dropout Problem Reconsidered

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  • Richard D. MacMinn

Abstract

This paper establishes the existence of an equilibrium wage distribution for a labor market in which job seekers search sequentially. The search model shows why some workers will drop out of the market. Previous analysis of policies designed to reduce the number of dropouts was partial because wage distributions were exogenously given. Through the use of the equilibrium wage distribution implied by each policy, the analysis here shows that subsidizing search or imposing a minimum wage will reduce the number of dropouts, while a job training program or a reduction in unemployment compensation may either increase or decrease the number of dropouts.

Suggested Citation

  • Richard D. MacMinn, 1980. "Job Search and the Labor Dropout Problem Reconsidered," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(1), pages 69-87.
    • Handle: RePEc:oup:qjecon:v:95:y:1980:i:1:p:69-87.
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    File URL: http://hdl.handle.net/10.2307/1885349
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    Cited by:

    1. Gaumont, Damien & Schindler, Martin & Wright, Randall, 2006. "Alternative theories of wage dispersion," European Economic Review, Elsevier, vol. 50(4), pages 831-848, May.
    2. Beam, Emily A., 2021. "Search costs and the determinants of job search," Labour Economics, Elsevier, vol. 69(C).
    3. Eckstein, Zwi & van den Berg, Gerard J, 2003. "Empircial labor search models: A survey," Working Paper Series 2003:18, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Gerard J. van den Berg, 2003. "Multiple Equilibria and Minimum Wages in Labor Markets with Informational Frictions and Heterogeneous Production Technologies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1337-1357, November.
    5. Eckstein, Zvi & van den Berg, Gerard J., 2007. "Empirical labor search: A survey," Journal of Econometrics, Elsevier, vol. 136(2), pages 531-564, February.
    6. van den Berg, Gerard J, 1999. "Empirical Inference with Equilibrium Search Models of the Labour Market," Economic Journal, Royal Economic Society, vol. 109(456), pages 283-306, June.

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