Alternative job search strategies in remote rural and peri-urban labour markets: the role of social networks

This paper examines the importance of informal methods (especially social networking) to the job search strategies used by unemployed people. It compares three areas: a small rural town; a larger, more sparsely populated, remote rural area; and a centrally-located, peri-urban labour market. The analysis is based first on survey research undertaken with 490 job seekers across the study areas. Emerging issues were then followed up during a series of twelve focus groups. The survey research showed that job seekers in the rural study areas were significantly more likely to use social networks to look for work. However, those who had experienced repeated or long-term periods out of work, the unskilled and young people were significantly less likely to use such networks. Focus groups confirmed the perceived importance of social networking to the job search process in rural areas, in contrast to the more marginal role such methods appear to play in peri-urban settings. For many rural job seekers, formal job search activities conducted through Jobcentres were seen as largely symbolic, lacking the practical value of social networking. These results suggest that service providers seeking to assist unemployed people in rural areas need to address the problems faced by many disadvantaged job seekers who are currently caught between their lack of social network relations and the absence of local public employment service facilities in more remote communities

ENDOGENOUS JOB CONTACT NETWORKS

We develop a model where workers, anticipating the risk of becoming unemployed, invest in connections in order to access information about available jobs that other workers may have. The investment in connections is high when the job separation rate in the labor market is moderate, whereas it is low for either low or high levels of job separation rate. The equilibrium response of network investment to changes in the labor market conditions generates novel empirical predictions. In particular, the probability that a worker finds a new job via his connections increases in the separation rate when the separation rate is low, whereas it decreases when the separation rate is high. These predictions are supported by the empirical patterns that we document for the U.K. labor market

Does the Hartz IV Reform have an Effect on Matching Efficiency in Germany? A Stochastic Frontier Approach

In the course of a comprehensive labor market reform started in 2002 and finished through the implementation of the most radical measure Hartz IV in 2005, I exploit its impact on matching processes in Germany. I use disaggregated data for 178 local employment agencies to examine the effects of stocks and flows of vacancies and unemployed on the hiring rate as well as on the matching efficiency. Building on the work of Ibourk et al. (2004) and Fahr and Sunde (2006), I employ a stochastic frontier analysis. As a functional framework I choose the translog function to address the interactions of stocks and flows in generating new hires. Furthermore, the twofold structure of a stochastic frontier allows for a modeling of potential sources (e.g. Hartz IV) expected to induce an increased or decreased matching efficiency. My results suggest that Hartz IV exhibits a significantly positive impact on the hiring rate and the matching efficiency. Compared to 1998, on average matching efficiency experienced an increase in 2007

Frictional Unemployment on Labor Flow Networks

We develop an alternative theory to the aggregate matching function in which workers search for jobs through a network of firms: the labor flow network. The lack of an edge between two companies indicates the impossibility of labor flows between them due to high frictions. In equilibrium, firms' hiring behavior correlates through the network, generating highly disaggregated local unemployment. Hence, aggregation depends on the topology of the network in non-trivial ways. This theory provides new micro-foundations for the Beveridge curve, wage dispersion, and the employer-size premium. We apply our model to employer-employee matched records and find that network topologies with Pareto-distributed connections cause disproportionately large changes on aggregate unemployment under high labor supply elasticity

The market for job placement : a model of headhunters

This paper deals with the consequences of the existence of private employment agencies on the labor market. Using a matching framework, we study the conditions of existence of private employment agencies and the consequences of competition on the market for job placement. We show that the private employment agencies enter in the labour market only if they are much more efficient than the private agency. Moreover, the level of the unemployment benefits is a disincentive to manage workers for the private agency. Because of a high fallback position for the worker, it is costly for the private employment agency to manage a worker having some low probabilities to exit from unemployment. If these conditions are satisfied, the existence of private employment agencies improve the labor market through shorter unemployment spells and a lower unemployment rate. Moreover, an improvement in the matching process is an incentive for the firms to post vacancies at the private agencies. Nevertheless, the workers managed by the private agencies receive some lower wages than the other workers because of the payment by the firm for recruiting a worker. Finally, we show that private employment agencies have a natural disincentive to manage unskilled workers. But, the introduction of a subsidy to match an unskilled worker with a vacancy seems to be a sufficient incentive to make the private employment agencies managing unskilled workers.Unemployment, matching model, public employment agencies, private employment agencies.

Beyond skill mismatch. Why there are so many unfilled vacancies and simultaneously high unemployment rates?

The traditional analysis of unfilled vacancies is grounded primarily in the interpretationof the Beveridge curve and mainly in the explanation of skills mismatch. However,it is easily verified that this is insufficient. In this text we try to collect, based on theavailable literature, a number of variables that can consolidate the comprehension ofthis phenomenon. We try to build a model that discriminates these explanatory variables(administrative issues, vacancy features, labour market and job seeker characteristics)in order to provide users and decision makers a set of decision-making aids,based on evidence criteria, to set reliable employment and training policies and not onpolitical-ideological fluctuations

Selective hiring and welfare analysis in labor market models

Firms select not only how many, but also which workers to hire. Yet, in standard search models of the labor market, all workers have the same probability of being hired. We argue that selective hiring crucially affects welfare analysis. Our model is isomorphic to a search model under random hiring but allows for selective hiring. With selective hiring, the positive predictions of the model change very little, but the welfare costs of unemployment are much larger because unemployment risk is distributed unequally across workers. As a result, optimal unemployment insurance may be higher and welfare is lower if hiring is selective.labor market models, welfare, optimal unemployment insurance

Skills diversity in unity

At any point in time, skills gaps, mismatches, and shortages arise because of an imperfect correspondence between the singular sets of skills required by different open vacancies and the unique combinations of capabilities embodied in every job seeker - skills diversity in unity. This paper first constructs an abstract framework for defining and thinking about these phenomena in a unified, formal and objective way. The main building block is a discrete skills space in which the locations of vacancies and workers are determined by the vectors of skills characterizing them. We define skills gaps and mismatches as two different distance measures between them, and derive a condition for each vacancy that determines whether or not it experiences a skills shortage. We then develop a job matching model with imperfect information, in which skills mismatches influence the job application decisions of the workers, while skills gaps and shortages shape the competition for workers on the resulting bipartite job applications network. The tools proposed in this paper could in future work be employed as the main ingredients of an agent-based model used to investigate how skills gaps, mismatches and shortages affect equilibrium outcomes in the context of skills diversity in unity and imperfect informatio

Job search strategies and social networks : evidence from the Khayelitsha

Includes bibliographical references (leaves 58-61).The thesis investigates factors which determine the choice of the search method used by the unemployed in looking for jobs. In line with the existing literature on job search in South Africa we identify that job search is constrained by the low probability of finding a job and the cost of job search. Especially in the context of mass unemployment, job seekers have to evaluate the benefits and costs of job search. It has been suggested that as a response to adverse conditions of the labour market, the use of social networks is an important search strategy in getting access to the labour market. This thesis therefore pays especially attention to social networks. We develop a more formal search model to establish how certain factors can either constrain or facilitate the search process