Structural Estimation of Search Intensity: Do non-employed workers search hard enough?

The speed at which unemployed workers \u85nd jobs depends on their search intensity. Most of the literature de nes search intensity as a scalar that inuences the arrival rate of job o¤ers. In this paper we treat it explicitly as the number of job applications that workers send out in a given period. This number of applications and the wage distribution are simultaneously determined. We structurally estimate the search cost distribution, the implied matching probabilities, the productivity of a match, and the ow value of non-labor market time within a segment. These estimates are then used to derive the socially optimal distribution of search intensities. We \u85nd that, from a social point of view, too little workers participate and that the unemployed workers search too much. The low participation rate reects a standard hold-up problem and the excess number of applications per worker is due to rent seeking behavior. Most welfare gains can be realized by a combination of opening more vacancies and increasing participation. If they are set optimally, output could be about 15 % higher. A positive modest binding minimum wage or UI bene\u85ts conditional on applying at least once, increases participation, decreases rent seeking and decreases entry. The total welfare e¤ects of those instruments are positive as long as they are set not too high