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Job Search, Job Findings and the Role of Unemployment Insurance History

Author

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  • Similan Rujiwattanapong

    (Waseda University)

Abstract

Standard search theory suggests that (1) job search intensity increases with the relative gain from searching, and that (2) job search intensity increases the job finding probability. Firstly, this paper presents new empirical findings that are at odds with these theoretical predictions when workers are categorised by their unemployment insurance (UI) history. Unemployed workers who either are currently receiving or used to receive UI search harder than those who never take up UI during their unemployment spells. What’s more, despite their higher search intensity, those with a UI history have a lower job finding probability. Subsequently, I introduce unproductive and inefficient job search, consistent with these empirical findings, to an otherwise standard stochastic equilibrium search-and-matching model with endogenous search intensity. Three key results emerge from these job search imperfections: (1) aggregate search intensity becomes acyclical leading to an underestimated matching efficiency, (2) the general equilibrium effects of UI extensions and the labour market fluctuations are dampened, and (3) unemployment and its duration are more persistent.

Suggested Citation

  • Similan Rujiwattanapong, 2024. "Job Search, Job Findings and the Role of Unemployment Insurance History," Discussion Papers 2441, Centre for Macroeconomics (CFM).
    • Handle: RePEc:cfm:wpaper:2441
    as

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    File URL: https://www.lse.ac.uk/CFM/assets/pdf/CFM-Discussion-Papers-2024/CFMDP2024-41-Paper.pdf
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    References listed on IDEAS

    as
    1. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
    2. Nakajima, Makoto, 2012. "A quantitative analysis of unemployment benefit extensions," Journal of Monetary Economics, Elsevier, vol. 59(7), pages 686-702.
    3. Henry S. Farber & Robert G. Valletta, 2015. "Do Extended Unemployment Benefits Lengthen Unemployment Spells?: Evidence from Recent Cycles in the U.S. Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 50(4), pages 873-909.
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    More about this item

    Keywords

    Business cycles; job search intensity; matching efficiency; unemployment insurance; unemployment dynamics;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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