Working Paper

Job Applications and Labor Market Flows


Abstract: Unemployment inflows have declined sharply since the 1980s while unemployment outflows have remained mostly steady despite a rise in workers' applications over time. Using a random search model of multiple applications with costly information, we show how rising applications incentivize more firms to acquire information, improving the realized distribution of match qualities. Higher concentrations of high productivity matches reduce the incidence of endogenous separations, causing unemployment inflow rates to fall. Quantitatively, our model replicates the relative change in inflow and outflow rates as well as the decline in acceptance rates, job offers and the rise in reservation wages.

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

JEL Classification: E24; J63; J64;

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

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Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2020-08-07

Number: 2020-023