Research Highlights

The Job Search Intensity Supply Curve: How Labor Market Conditions Affect Job Search Effort

A new working paper from the Upjohn Institute helps us understand whether job search effort is dampened during recessions because of poor prospects or whether the unemployed are trying harder to find work, given that jobs are scarce. It also calms fears that extending UI benefits will further decrease search intensity. Jeremy Schwartz develops a model that implies that when labor market conditions and search intensity are perfect complements (i.e., procyclical), individuals increase job search intensity as the labor market improves. However, if search intensity is countercyclical, and thus search and labor market conditions are perfect substitutes, search intensity  decreases with an improving labor market. The figure below indicates the relationship between labor market conditions and search intensity when they are neither perfect complements nor perfect substitutes. When labor conditions are poor (below point A) the procyclical nature of search and the labor market dominates and the search intensity curve is upward sloping. The reverse is true for very good labor market conditions (above point A). This suggests that the supply of search intensity with respect to labor market conditions may form a backward-bending curve.

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Research Highlights