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

36 Pages Posted: 6 Jun 2003

See all articles by Eleonora Patacchini

Eleonora Patacchini

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

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)

Date Written: May 2003

Abstract

A model is considered in which optimal search intensity is a result of a tradeoff between short-run losses due to higher search costs (more interviews, commuting...) and long-run gains due to a higher chance of finding a job. We show that this optimal search intensity is higher in areas characterized by larger cost of living and/or higher labor 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) labor 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, R1

Suggested Citation

Patacchini, Eleonora and Zenou, Yves, Search Intensity, Cost of Living and Local Labor Markets in Britain (May 2003). Available at SSRN: https://ssrn.com/abstract=412468

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

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

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