Essays on labour market search

This thesis contains three studies on the topic of labour market search. Chapter 1 provides an overview of the studies. Chapter 2 reports an experimental study which examines how social comparisons affect behavior in a sequential search task. In a control treatment subjects search in isolation, while in two other treatments subjects get feedback on the search decisions and outcomes of a partner subject. The average level and rate of decline of reservation wages are similar across treatments. Nevertheless, subjects who are able to make social comparisons search differently from those who search in isolation. Within a search task we observe a reference wage effect: when a partner exits, the subject chooses a new reservation wage which is increasing in partner income. We also observe a social learning effect: between search tasks, subjects who have been paired with a more patient and successful partner increase their reservation wages in the next task. Chapter 3 reports a study in which we provide the first microeconometric estimates of the hazards to matching on both sides of a labour market, decomposed into two constituent parts. Namely, (i) the rate at which job-seekers and vacancies contact each other (i.e. having interviews), and (ii) the probability that a contact results in a match. To do this, we use unique data which contains information on job-seekers, vacancies, interviews and interview outcomes. We use a specification which addresses the problems of the temporal aggregation bias and spatial spillovers highlighted by the two-sided estimates. Our estimates suggest that market tightness affects the matching rates mainly through affecting the meeting rates. In both the raw data and the estimates, we find the decline in the matching hazard is driven by the decline in the contact hazard, and not by a fall in the matching probability. And we also report the effects of various characteristics on matching decomposed into the effects on meeting and matching probability. Using the same data as Chapter 3, Chapter 4 provides further evidence on the mechanism by which job-seekers and vacancies decide whom to contact during their search. Since the data features an environment where both sides of the market have access to a database (or marketplace) of potential partners, a natural model of search is one of stock-flow matching, and we show that the predictions of this model outperform those of a simple random matching model. Our descriptive and econometric evidence shows that it is the inflow rate of new agents, rather than the total stock of agents, which determines the contact rates of existing agents, consistent with the predictions of the stock-flow model. Chapter 5 summarizes the findings of this dissertation and concludes