Job search requirements, effort provision and labor market outcomes

Abstract

How effective are effort targets? This paper provides novel evidence on the effects of job search requirements on effort provision and labor market outcomes. Based on large-scale register data, we estimate the returns to required job search effort, instrumenting individual requirements with caseworker stringency. Identification is ensured by the conditional random assignment of job seekers to caseworkers. We find that the duration of un-and non-employment both decrease by 3% if the requirement increases by one monthly application. When instrumenting actual applications with caseworker stringency, an additionally provided monthly application decreases the length of spells by 4%. In line with theory, we further find that the effect of required effort decreases in the individual's voluntary effort. Finally, the requirement level causes small negative effects on job stability, reducing the duration of re-employment spells by 0.3% per required application. We find a zero effect on re-employment wages. JEL-Codes: J640, J650.

Benefit duration, job search behavior and re-employment

“…Faberman and Kudlyak (2019) use high-frequency data on individuals' application activity from a U.S. job vacancy website and find a decline in search effort over the course of the unemployment spell. Last, Arni and Schiprowski (2019) use Swiss administrative data to show that requirement-induced effort changes have a meaningful impact on job finding. We add to theses insights by providing evidence on the relationship between the PBD, initial search effort and re-employment outcomes.…”

The effects of unemployment insurance in late career: Evidence from Social Security offsets

“…Unfortunately, the sample of treated observations in this study is too small to obtain meaningful estimates of differential effects across these variables. However, a growing literature on search requirements and monitoring show that these policies have measurable impacts on UI claiming and durations (Arni & Schiprowski, 2019; Borland & Tseng, 2007; Johnson & Klepinger, 1994; Klepinger et al, 2002; McVicar, 2008; McVicar, 2010; Petrongolo, 2009).…”

Job search requirements for older unemployed workers

“…On the basis of the observed accepted wages, it can therefore not be concluded that lower reservation wages were an important mechanism in the increased exit rates due to the abolishing of job search requirements for the older unemployed. A study of prime-age workers in Switzerland also finds no effect of job search requirements on accepted wages, but the authors do find a very small negative effect (-0.3%) on the duration of re-employment spells [5].…”

“…While previous studies ([1], [7]) measure job search requirements based on a policy change that increases search requirements, another study uses variation in search requirements set at the individual level by individual case workers, exploiting administrative data on unemployment inflow in the period 2010-2014 for Switzerland [5]. This study focuses on prime-age workers, rather than older workers.…”