Job Search by Employed and Unemployed Youth

Analysis of data from the New Youth Cohort of the National Longitudinal Survey yields evidence that young unemployed job seekers chose higher levels of search effort (as measured by number of methods used and time spent per method) and lower reservation wages (relative to offered wages) than did comparable employed job seekers in 1981. These differences in search choices at least partly explain differences in search outcomes between the two groups: unemployed searchers apparently were more likely than employed searchers to gain new employment, and the wages they obtained were slightly lower. The author argues that the greater search effort by unemployed job seekers is due to the higher costs of search they bear because of foregone earnings.