Search Effort in the Labor Market

Abstract

This paper develops a theory of the unemployed individual's choice of how much effort to devote to search. The term effort involves two choice variables, time and money. Specific attention is given to the role of unemployment contingent income and the probability of obtaining employment without search. The theory is tested using data from a supplement to the May 1976 Current Population Survey. The empirical findings suggest search theory is important in explaining the behavior of the unemployed: unemployment insurance benefits decrease search time per period, and search time is lower for individuals on layoff-a group that has a positive probability of employment without search effort.

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