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A structural analysis of job search methods and subsequent wages

Pierre Koning (), Gerard J. van den Berg and Geert Ridder

No 36, Serie Research Memoranda from VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics

Abstract: In most studies on individual labor market transitions, the search process leading to job offers is a black box. In this paper we specify and estimate a search model that distinguishes between formal (applications) and informal (referrals) search methods. Job offers can be obtained by either method, and the corresponding wage offer distributions are allowed to differ. The model allows for search during unemployment as well as search on the job. We conclude that although the method by which jobs are found varies considerably with education and occupation, the use of a particular search method does not result in a higher wage. Moreover, individuals who have an advantage in informal search do not find a job more rapidly, which casts doubt on the hypothesis that the search method is freely chosen by the searcher by comparing costs and returns.

Keywords: job search; search methods; wages; individual labor market transitions (search for similar items in EconPapers)
JEL-codes: E24 (search for similar items in EconPapers)
Date: 1997
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