Job search with nonparticipation

B. van der Klaauw, P. Frijters

Research output: Contribution to JournalArticleAcademic

Abstract

In a non-stationary job search model we allow unemployed workers to have a permanent option to leave the labour force. Transitions into nonparticipation occur when reservation wages drop below the utility of being nonparticipant. Taking account of these transitions allows the identification of duration dependence in the job offer arrival rate and the wage offer distribution. We estimate the structural model with individual data from the German Socio-Economic Panel and use simulated maximum likelihood. The results show that the presence of significant negative duration dependence in the wage offer distribution causes reservation wages to decrease. The rate at which job offers arrive is constant over the unemployment duration. These findings provide micro evidence that the job search environment of unemployed workers is non-stationary because of loss of skills. © Royal Economic Society 2006.
Original languageEnglish
Pages (from-to)45-83
JournalEconomic Journal
Volume116
DOIs
Publication statusPublished - 2006

Fingerprint

Dive into the research topics of 'Job search with nonparticipation'. Together they form a unique fingerprint.

Cite this