Employed and Unemployed Job Search: A Comparison of Choices and Outcomes among Youth
NBER Working Paper No. 1861
This paper presents evidence that young unemployed job seekers choose higher levels of search effort (as measured by numbers of methods used and time spent per method) and lower relative reservation wages than do comparable employed seekers. The unemployed also have higher probabilities of gaining new employment, which reflect higher probabilities of receiving offers and especially higher probabilities of accepting them; as well as slightly lower wages.These differences in outcomes between the two groups are at least partly explained by differences in their respective search choices.The evidence thus suggests that unemployed job seekers have higher costs of search (from foregone earnings) than do the employed, causing the former to seek new jobs more eagerly.
Published: Holzer, Harry J. "Job Search by Employed and Unemployed Youth,"L Industrial and Labor Relations Review, Vol. 40, No. 4, July 1987, pp. 601-611.