Evidence on Job Search Models from a Survey of Unemployed Workers in Germany

108 Pages Posted: 4 May 2020

See all articles by Stefano DellaVigna

Stefano DellaVigna

University of California, Berkeley; National Bureau of Economic Research (NBER)

Jörg Heining

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Johannes F. Schmieder

Boston University - Department of Economics; IZA; National Bureau of Economic Research (NBER)

Simon Trenkle

IZA Institute of Labor Economics

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Abstract

The job finding rate of Unemployment Insurance (UI) recipients declines in the initial months of unemployment and then exhibits a spike at the benefit exhaustion point. A range of theoretical explanations have been proposed, but those are hard to disentangle using data on job finding alone. To better understand the underlying mechanisms, we conducted a large text-message-based survey of unemployed workers in Germany. We surveyed 6,800 UI recipients twice a week for 4 months about their job search effort. The panel structure allows us to observe how search effort evolves within individual over the unemployment spell. We provide three key facts: 1) search effort is flat early on in the UI spell, 2) search effort exhibits an increase up to UI exhaustion and a decrease thereafter, 3) UI recipients do not appear to time job start dates to coincide with the UI exhaustion point. A model of reference-dependent job search can explain these facts well, while a standard search model with unobserved heterogeneity struggles to explain the second fact. The third fact also leaves little room for a model of storable offers to explain the spike.

Keywords: reference dependence, job search, unemployment, survey

JEL Classification: J64, J65, D91

Suggested Citation

DellaVigna, Stefano and Heining, Jörg and Schmieder, Johannes F. and Trenkle, Simon, Evidence on Job Search Models from a Survey of Unemployed Workers in Germany. IZA Discussion Paper No. 13189, Available at SSRN: https://ssrn.com/abstract=3590887

Stefano DellaVigna (Contact Author)

University of California, Berkeley ( email )

Economics Department
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National Bureau of Economic Research (NBER)

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Jörg Heining

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

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Germany

Johannes F. Schmieder

Boston University - Department of Economics ( email )

270 Bay State Road
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United States

IZA ( email )

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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Simon Trenkle

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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