Search Intensity, Cost of Living and Local Labour Markets in Britain

29 Pages Posted: 27 Feb 2003

See all articles by Yves Zenou

Yves Zenou

Monash University - Department of Economics; Stockholm University; Research Institute of Industrial Economics (IUI); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Eleonora Patacchini

Einaudi Institute for Economics and Finance (EIEF) ; IZA Institute of Labor Economics

Date Written: January 2003

Abstract

A model is considered in which optimal search intensity is a result of a trade-off between short-run losses due to higher search costs (more interviews, commuting...) and long-run gains due to a higher chance to find a job. We show that this optimal search intensity is higher in areas characterized by larger cost of living and/or higher labour market tightness. We then test this model using county-level data in England for the period 1991-2000. As predicted by the theoretical model, both the county cost of living and the county labour market tightness are found to have a positive and significant effect on the county search intensity. We also find positive spatial correlation between counties (i.e. clustering of counties with similar level of search intensity) and strong spatial spillover effects.

Keywords: Job matching, search intensities, dynamic panel data, GMM estimation, measurement errors, spatial correlation

JEL Classification: C23, D83, J64, R10

Suggested Citation

Zenou, Yves and Patacchini, Eleonora, Search Intensity, Cost of Living and Local Labour Markets in Britain (January 2003). Available at SSRN: https://ssrn.com/abstract=380120

Yves Zenou (Contact Author)

Monash University - Department of Economics ( email )

Australia

Stockholm University ( email )

Universitetsvägen 10
Stockholm, Stockholm SE-106 91
Sweden

Research Institute of Industrial Economics (IUI) ( email )

P.O. Box 5501
S-114 85 Stockholm
Sweden

IZA Institute of Labor Economics

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

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Eleonora Patacchini

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

IZA Institute of Labor Economics ( email )

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

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