TY - JOUR AU - Guler,Bulent AU - Guvenen,Fatih AU - Violante,Giovanni L. TI - Joint-Search Theory: New Opportunities and New Frictions JF - National Bureau of Economic Research Working Paper Series VL - No. 15011 PY - 2009 Y2 - May 2009 UR - http://www.nber.org/papers/w15011 L1 - http://www.nber.org/papers/w15011.pdf N1 - Author contact info: Bulent Guler Indiana University 100 S Woodlawn Ave Bloomington, IN, 47405 Tel: 812-855-7791 E-Mail: bguler@gmail.com Fatih Guvenen Department of Economics University of Minnesota 4-151 Hanson Hall 1925 Fourth Street South Minneapolis, MN, 55455 Tel: 612-6250767 E-Mail: guvenen@umn.edu Giovanni L. Violante Department of Economics New York University 19 W. 4th Street New York, NY 10012-1119 Tel: 212/992-9771 Fax: 212/995-3932 E-Mail: glv2@nyu.edu AB - Search theory routinely assumes that decisions about the acceptance/rejection of job offers (and, hence, about labor market movements between jobs or across employment states) are made by individuals acting in isolation. In reality, the vast majority of workers are somewhat tied to their partners--in couples and families--and decisions are made jointly. This paper studies, from a theoretical viewpoint, the joint job-search and location problem of a household formed by a couple (e.g., husband and wife) who perfectly pools income. The objective of the exercise, very much in the spirit of standard search theory, is to characterize the reservation wage behavior of the couple and compare it to the single-agent search model in order to understand the ramifications of partnerships for individual labor market outcomes and wage dynamics. We focus on two main cases. First, when couples are risk averse and pool income, joint search yields new opportunities--similar to on-the-job search--relative to the single-agent search. Second, when the two spouses in a couple face job offers from multiple locations and a cost of living apart, joint-search features new frictions and can lead to significantly worse outcomes than single-agent search. ER -