Job Search with Nonparticipation

Bas van der Klaauw and Paul Frijters

No 3922, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In a non-stationary job search model we allow unemployed workers to have a permanent option to leave the labour force. Transitions into nonparticipation occur when reservation wages drop below the utility of being nonparticipant. Taking account of these transitions allows the identification of the duration dependence in the job offer arrival rate and the wage offer distribution. We estimate the structural model with individual data from the German Socio-Economic Panel and use simulated maximum likelihood. The results show that the presence of significant negative duration dependence in the wage offer distribution causes reservation wages to decrease. The rate at which job offers arrive is constant over the unemployment duration. These findings provide micro-evidence that the job search environment of unemployed workers is non-stationary because of loss of skills.

Keywords: Endogenous nonparticipation; Non-stationary job search; Duration dependence; Structural empirical analysis; Simulated maximum likelihood; Heterogeneity (search for similar items in EconPapers)
JEL-codes: C15 C41 J64 (search for similar items in EconPapers)
Date: 2003-06
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Citations: View citations in EconPapers (22)

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Related works:
Journal Article: Job Search with Nonparticipation (2006)
Working Paper: Job Search with Nonparticipation (2004)
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