Search Results
Discussion Paper
How Do People Find Jobs?
Most people find themselves looking for work at some point in their adult lives. But what brings employers and job seekers together? And does searching for a new job while unemployed lead to different outcomes than searching while employed? Little is known about the job search process for unemployed workers. Even less is known about the search process and outcomes for currently employed workers?so?called ?on?the?job? search. This Liberty Street Economics post aims to shed light on these questions and to draw some conclusions for our understanding of labor market dynamics more generally.
Working Paper
Labor Market Shocks and Monetary Policy
We develop a heterogeneous agent New Keynesian model featuring a frictional labor market with on-the-job search to quantitatively study the positive and normative implications of employer-to-employer (EE) transitions for inflation. We find that EE dynamics played an important role in shaping the differential inflation dynamics observed during the Great Recession and the COVID-19 recoveries, with the former exhibiting subdued EE transitions and inflation despite both episodes sharing similar unemployment dynamics. The optimal monetary policy prescribes a strong positive response to EE ...
Newsletter
How do unemployment benefits relate to job search behavior?
We examine the relationship between unemployment insurance and job search using data from 2013 through 2019. Our research shows that the unemployed exert a high level of effort to find work. This is especially true for those receiving unemployment insurance benefits. Those who have exhausted their unemployment benefits search less intensely for work, but are also willing to accept work that pays considerably less than their prior job.
Report
Real-time search in the laboratory and the market
While widely accepted models of labor market search imply a constant reservation wage policy, the empirical evidence strongly suggests that reservation wages decline in the duration of search. This paper reports the results of the first real-time-search laboratory experiment. The controlled environment that subjects face is stationary, and the payoff-maximizing reservation wage is constant. Nevertheless, subjects' reservation wages decline sharply over time. We investigate two hypotheses to explain this decline: 1) searchers respond to the stock of accruing search costs, and 2) searchers ...
Working Paper
The Implications of Labor Market Heterogeneity on Unemployment Insurance Design
We digitize state-level and time-varying unemployment insurance (UI) laws on eligibility, payment amount, and payment duration and combine them with microdata to estimate UI eligibility, take-up, and replacement rates at the individual level. We document how income and wealth levels affect unemployment risk, eligibility, take-up, and replacement rates over the course of unemployment. We evaluate whether these findings are important for shaping UI policy design using a general-equilibrium incomplete-markets model with a frictional labor market that matches our empirical findings. We show that ...
Working Paper
The Implications of Labor Market Heterogeneity on Unemployment Insurance Design
We digitize state-level and time-varying unemployment insurance (UI) laws on initial eligibility, payment amount, and payment duration and combine them with microdata on labor market outcomes to estimate UI eligibility, take-up, and replacement rates at the individual level. We document how levels of income and wealth affect unemployment risk, eligibility, take-up, and replacement rates both upon job loss and over the course of unemployment spells. We evaluate whether these empirical findings are important for shaping UI policy design using a general equilibrium incomplete markets model ...
Working Paper
The Implications of Labor Market Heterogeneity on Unemployment Insurance Design
We digitize state-level and time-varying unemployment insurance (UI) laws on initial eligibility, payment amount, and payment duration and combine them with microdata on labor market outcomes to estimate UI eligibility, take-up, and replacement rates at the individual level. We document how levels of income and wealth affect unemployment risk, eligibility,take-up, and replacement rates both upon job loss and over the course of unemployment spells. We evaluate whether these empirical findings are important for shaping UI policy design using a general equilibrium incomplete markets model ...
Working Paper
Spousal Labor Supply Response to Job Displacement and Implications for Optimal Transfers
I document a small spousal earnings response to the job displacement of the family head. The response is even smaller in recessions, when earnings losses are larger and additional insurance is valuable. Using cross-state differences in transfer generosity, I find that generous transfers substantially crowd out the spousal earnings response. To study its policy implications, I develop an incomplete markets model with family labor supply and aggregate fluctuations, where predicted labor supply elasticities to taxes and transfers are in line with empirical estimates both in aggregate and across ...
Working Paper
Reservation Wages Revisited: Empirics with the Canonical Model
Using innovative longitudinal data from a survey of unemployment insurance (UI) recipients, we test several implications of a canonical job search model for reservation wages during unemployment spells. First, consistent with the model, we find that reservation wages fall faster when UI benefit durations are shorter. However, workers set their initial reservation wages higher, and adjust them slower, relative to model predictions. Second, workers' expectations—elicited at the beginning of their unemployment spell—about how their reservation wage will evolve if they remain unemployed are ...