The Geography of Job Search and Mismatch Unemployment†

Can we decrease unemployment by moving job seekers to areas with better job opportunities? How do localized labor market shocks affect unemployment in surrounding areas? To answer such questions, we need data on the distance between job seekers and the jobs they apply to. Using data from the popular website CareerBuilder.com, we quantify how application probability declines with distance from the job seekers ’ ZIP code of residence. 82 % of applications are sent to jobs within the same city (Core-Based Statistical Area, CBSA). Using a new mismatch index that takes into account the geography of job search, we find that US unemployment could be reduced by up to 3 % by reallocating job seekers across ZIP codes. This magnitude of mismatch is similar to what we find using data aggregated at the CBSA level. Our evidence suggests that the CBSA is a good definition of a local labor market