Job Applications and Labor Market Flows

RePEc Short ID: pbi318
ORCID iD: 0000-0001-7323-1932

Birinci, Serdar; See, Kurt; Wee, Shu Lin

doi:10.20955/wp.2020.023

Working Paper Revision

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