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Job Applications and Labor Market Flows


Abstract: Job applications have risen over time yet job-finding rates remain unchanged. Meanwhile, separations have declined. We argue that increased applications raise the probability of a good match rather than the probability of job-finding. Using a search model with multiple applications and costly information, we show that when applications increase, firms invest in identifying good matches, reducing separations. Concurrently, increased congestion and selectivity over which offer to accept temper increases in job-finding rates. Our framework contains testable implications for changes in offers, acceptances, reservation wages, applicants per vacancy, and tenure, objects that enable it to generate the trends in unemployment flows.

Keywords: Multiple Applications; Inflows; Outflows; Unemployment; Costly Information;

JEL Classification: E24; J63; J64;

https://doi.org/10.20955/wp.2020.023

Status: Published in The Review of Economic Studies

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Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2021-08-16

Number: 2020-023

Note: Publisher DOI: https://doi.org/10.1093/restud/rdae064

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