Job Search Behavior among the Employed and Unemployed

Abstract:

This paper uses a new and exhaustive questionnaire on the labor market outcomes of roughly 1,300 individuals surveyed through the New York Fed’s Survey of Consumer Expectations. We use the data to examine the job search behavior of both employed and non-employed individuals. The data have detailed information on several aspects of job search, including the duration and intensity of search, the offers received, the reservation wage of the jobseeker, and the relative importance of various non-wage job benefits. The survey is unique in that it includes information on the job search outcomes of those employed and non?employed, including those who report not searching for work (e.g., we have information on job referrals and unsolicited offers). It is also unique in that it has the same information on the job search outcomes that led to the job of those currently employed. We use the data to examine the relationships between search behavior and search outcomes as a function of labor force status. The survey allows us to examine one’s search effort regardless of their self-reported labor force status (i.e., regardless of whether they are employed, unemployed or out of the labor force). We are able to examine an individual’s current job search, as well as the job search that led the employed to their current job. We use extensive information on the types of methods used, the types of jobs offered, and the reservation wages job seekers report while seeking work. We find that a large fraction of the employed (24 percent) is actively searching for work, with about 40 percent of employed job seekers seeking an additional job rather than a new job. A small but notable fraction of those who report to be out of the labor force actively look for work as well. Both those who seek an additional job and those seeking work while reporting themselves as out of the labor force tend to look for, and attract offers from, part-time jobs with few benefits. The unemployed put by far the most effort into job search, especially the short-term unemployed. Nevertheless, the unemployed have the lowest yields in terms of employer contacts and offers, of all job seekers. Even employed individuals not seeking work tend to generate more offers than the unemployed. In fact, the unemployed account for 38.5 percent of all applications sent in the month leading up to our survey, but only account for 9.5 percent of the offers received. In contrast, the 2 employed receive about 67 percent of all offers, with over one-third of those going to those that did not look for work. We also find that job seekers employ a variety of different methods in the search and that offers through referrals and through unsolicited contacts play a large role in the hiring process.
We further find that, conditional on receiving an offer, the unemployed continue to fare far worse than employed job seekers. Offers to the unemployed pay lower wages, offer fewer hours, and are much less likely to offer benefits (about two thirds of offers to non-employed individuals did not offer any employer-provided benefits).The offers are relatively lower than their last wage, while the offers of the employed are about equal to their current wage. The offers are also relatively lower than the unemployed’s reported reservation wages and desired hours. Our data on reservation wages and acceptance decisions reveal that unemployed have lower reservation wages relative to their previous job, whereas employed job seekers’ reservation wage on average is higher than their current job’s wage. However, a surprisingly high fraction of employed job seekers report a reservation wage that is lower than the wage on the current job. This finding is reminiscent of the literature that found that many job-to-job transitions are associated with wage declines, though it is unclear whether these wage declines are due to selection or differences in nonwage amenities. The unique feature of our data allows us to control for a number of factors, such as anticipation of layoffs or quits, and isolate the importance of non-wage amenities for job-to-job transitions.
Finally, we analyze the search process that led to the current job, as a function of labor force status at the time of search. We find that those who started working on their current job immediately after the previous job ended – either through quit or layoff – fared significantly better than workers who were hired after a spell of non-employment in terms of wages and benefits. Moreover, those hired from non-employment were also more likely to be searching for work again at the time of the survey. We find evidence that workers who quit their previous jobs have somewhat better search outcomes relative to workers who were laid off from their previous jobs. Overall, our results suggest that job search is pervasive among both the employed and unemployed, but the unemployed face far worse prospects, despite putting in the greatest effort among all job seekers.