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Testing the independence of job arrival rates and wage offers

Christine Braun, Bryan Engelhardt, Benjamin Griffy and Peter Rupert

Labour Economics, 2020, vol. 63, issue C

Abstract: Is the arrival rate of a job independent of the wage that it pays? We answer this question by testing whether unemployment insurance alters the job finding rate differentially across the wage distribution. To do this, we use a Mixed Proportional Hazard Competing Risk Model in which we classify quantiles of the wage distribution as competing risks faced by searching unemployed workers. Allowing for flexible unobserved heterogeneity across spells, we find that unemployment insurance increases the likelihood that a searcher matches to higher paying jobs relative to low or medium paying jobs, rejecting the notion that wage offers and job arrival rates are independent. We show that dependence between wages and job offer arrival rates explains 9% of the increase in the duration of unemployment associated with unemployment insurance.

Keywords: Job search; Mixed proportional hazard; Competing risks; Unemployment (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:63:y:2020:i:c:s0927537120300105

DOI: 10.1016/j.labeco.2020.101804

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