The probability of finding a job
BibTeX
@article{shimer2008probability,
title={The probability of finding a job},
author={Shimer, Robert},
journal={American Economic Review},
volume={98},
number={2},
pages={268--273},
year={2008},
publisher={American Economic Association}
}
Abstract
NA?
Notes and Excerpts:
This paper (only 7 pages) shows a little model where workers wait for the economy to improve. Duration dependence because a newly unemployed worker is more likely to be close to the threshold of accepting a job.
$\delta_i(t)$ is extra lifetime utility from taking the best job now vs staying unemployed. Follows Brownian motion biased upwards.
Following Alvarez and Shimer’s (2007) model of rest unemployment, derives hazard rate of job finding as function of unemployment duration.
Compares to CPS panelish data (after 1994 - same issue I ran into)
Fourth, I weigh observations using the CPS final weights and seasonally adjust the number of people with duration r with each subsequent employ? ment status (employed, unemployed, or inactive) using a difference-from-moving-average.
51 percent of workers reporting one week duration find a job before the next survey and the share declines sharply thereafter. For workers with duration less than six months, the job finding probability averages 31 percent. It falls to 19 percent during the next six months and just 14 percent for work? ers who have been unemployed for over a year.5
Splits data into 3 groups, based on average job finding rate. Looks at high finding rate months and low finding rates. Fits a curve to the difference. Says that
the magnitude of the decline in the job find? ing probability is similar for all workers, regard? less of unemployment duration. Of course, this means that the percentage decline is largest for the long-term unemployed, so a reduction in the job finding probability disproportionately impacts the expected unemployment duration of those workers who are already long-term unemployed