This paper provides new evidence on time use and subjective well-being of employed and unemployed individuals in 14 countries. We devote particular attention to characterizing and modeling job search intensity, measured by the amount of time devoted to searching for a new job. Job search intensity varies considerably across countries, and is higher in countries that have higher wage dispersion. We also examine the relationship between unemployment benefits and job search.
The ﬁrm-speciﬁc human capital theory implies that large ﬁrms prefer to hire younger workers
because they invest more in workers than small ﬁrms do and because those investments are ﬁxed
costs. In this paper, I use data from the Beneﬁts Supplement to the Current Population Survey
(CPS) to demonstrate that large ﬁrms indeed hire younger workers than small ﬁrms, especially for
white-collar occupations. I present a simple model of ﬁrm cost minimization within an employee
search framework, which is consistent with large ﬁrms’ propensity to hire younger workers, and has
additional testable implications regarding large ﬁrms’ compensation structures. First, since young
workers are more valuable to large ﬁrms than to small ﬁrms, large ﬁrms oﬁer higher starting wages
to attract them. This implies ﬂatter starting wage—age proﬁles among the new hires in large ﬁrms.
Second, since large ﬁrms invest more in workers, they continue to pay higher wages to retain the
trained employees. This implies steeper wage-tenure proﬁles in large ﬁrms. Both predictions are
borne out by the CPS data. Most strikingly, for the newly hired white-collar workers, not only are
the starting wage-age proﬁles ﬂatter in large ﬁnns, but also the size-wage premium disappears for
workers hired at age 35 or older.
Furthermore, by exploiting cost variations in dimensions other than ﬁrm size, such as occupation
and industry, this model has additional testable implications. More speciﬁcally, an extension of
the simple model would imply that, for high training occupations, workers displaced at older ages
suffer greater wage losses than younger workers because they have a harder time ﬁnding a new good
job that requires high investments. But there should be no systematic difference in wage loss by
age for occupations that require little training. This prediction is supported by the data from the
Displaced Worker Surveys. Finally, limited evidence from the BLS Survey of Employer Provided
Training 1995 and the CPS suggests that industries that train more also appear to hire younger
This paper develops a model of job search where some information of value
is revealed only after a job starts and where job prospects need not be
identical. Using results from the theory of multi—armed bandits, it is shown
that the optimal sampling strategy consists of an ordering of the job
prospects to be searched. Those jobs with greater 'residual' uncertainty
remaining when the job begins, will, ceteris paribus, be placed higher in the
sampling order and be associated with a lower reservation wage. Thus, if jobs
differed only with respect to this match uncertainty, reservation wages would
increase over an unemployment spell. In general, when search costs and wage
distributions also differ across jobs, the behavior of reservation wages over
an unemployment spell need not be monotonic.
This paper provides new evidence on job search intensity of the unemployed in the U.S., modeling job search intensity as time allocated to job search activities. The main findings are: 1) the average unemployed worker in the U.S. devotes about 41 minutes to job search on weekdays, which is substantially more than his or her European counterpart; 2) workers who expect to be recalled by their previous employer search substantially less than the average unemployed worker; 3) across the 50 states and D.C., job search is inversely related to the generosity of unemployment benefits, with an elasticity between -1.6 and -2.2; 4) the predicted wage is a strong predictor of time devoted to job search, with an elasticity in excess of 2.5; 5) job search intensity for those eligible for Unemployment Insurance (UI) increases prior to benefit exhaustion; 6) time devoted to job search is fairly constant regardless of unemployment duration for those who are ineligible for UI. A nonparametric Monte Carlo technique suggests that the relationship between job search effort and the duration of unemployment for a cross-section of job seekers is only slightly biased by length-based sampling.