School Leavers and the Search for Employment

A search theoretic model due to Tony Lancaster and Andrew Chesher (1983) is utilized to provide estimates of the elasticity of young jo b seekers' reservation wages with respect to benefit levels and with respect to the rate of arrival of job offers. The elasticity of the probability of exit from unemployment is also estimated with respect to the same parameters. Evidence is found to suggest that the refusal of job offers is no greater a source unemployment among school leavers than among other groups. The results are, however, sensitive to distributional assumptions.