The Economics of Job Search: A Survey

Abstract

we concentrate on the job market and, with the following exception, do not review empirical studies of search in other markets. Recent empirical work by Telser ( 1 975) suggests that search (for the lowest price) may be insignificant in markets where the marginal cost of search is small. The dispersion of the price distribution is also small in these markets. He notes that it pays sellers to reduce search cost via brand names and advertising.2 These search costs are quite low for the relatively standard commodities in his study (gasoline and fruit juices). However, "the same methods of reducing the marginal cost of search are not as effective for all commodities of which the most notable example is labor service." Unfortunately, only a modest amount of serious empirical testing of the job search hypotheses has been accomplished. On the other hand, there has been a considerable amount of casual empiricism, i.e., reinterpretation of well known economic phenomena within a job search setting. Much of the empirical work described here belongs to this second class.A unified theory of search would explain job search behavior over the life cycle. An individual would be traced from his career choice decision until he withdrew from the labor market either permanently (disability or retirement) or temporarily because of a favorable opportunity to consume leisure or a more rewarding household task. During periods of labor force participation, the individual's quit and layoff behavior and his pattern of unemployment would also be explained. The empirical relations between these life cycle search strategies and institutional arrangements like the minimum wage, the welfare system, unemployment insurance, the structure of retirement policies like Social Security and the tax system could be fruitfully studied.if c 2 c,, do not search (drop out); if c < c,, search (choose frictional unemployment).+ 4. This analysis can be generalized to explain individual choice among industries (occupations). Prior to search, the job searcher calculates t i , i = 0, I , . . . , n, for each of the n+l industries (occupations) where search is contemplated. He initiates search in that industry (occupation) with the highest 6 i . Here leisure is represented by occupation number 0.

The Value of Moderate Obsession: Insights from a New Model of Organizational Search

“…Is the situation easy to assess without actually implementing the alternative, or only in the context of actual implementation? This is the important distinction between offline and online search or learning processes (Lippman and McCall 1976, Levitt and March 1988, Gavetti and Levinthal 2000. Within each of these categories, there is a rich variety of possible situations and interpretations.…”

Optimal Search and One-Way Trading Online Algorithms

“…This proves (22). Using (8) we derive the following expression forp 1 : (23) which is obtained when we solve the equation m)) forp 1 . We now substitute the expression forp 1 , (23), in (22) and learn that r (k) is the solution of the following equation:…”

Behavioral heterogeneity in dynamic search situations: Theory and experimental evidence

“…In the current experiment, F (·) is a discrete uniform distribution with lower bound e75 and upper bound e150. Let the cost of searching a new location be e c. Assume that at some stage in the search process, the minimal price that the searcher has observed so far is e m. 1 Basic search theory assumes that individuals treat the cost of each search step, once completed, as sunk costs (Kogut, 1990;Lippman and McCall, 1976) and that they compare the payoff of one additional search step with the payoff from stopping. 2 Then, subjects solve the problem based on a one-step forward-induction strategy and the expected gain from searching once more before stopping, G(m), is generally given by:…”