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Behavioral Job Search

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Handbook of Labor, Human Resources and Population Economics

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Abstract

Certain observed behaviors of job seekers are hard to explain with standard search theory. For example, job seekers reduce their reservation wages over time when searching from a known wage distribution, exhibit spikes and drops in search effort when unemployment benefits change, and persistently hold inaccurate beliefs about their job prospects. This chapter reviews the literature on behavioral explanations of job search behaviors like these, including reference dependence, present bias, locus of control, cognitive errors and heuristics, and self-image concerns.

Reference-dependent preferences may explain spikes and drops in search effort when unemployment benefit levels change if workers slowly adjust to new levels of income. Additionally, reference dependence may play a role in forming reservation wages during search if workers treat past wages as reference points. Present bias can impact search effort and job offer acceptance decisions: effort is costly now but pays off later, and rejecting a low wage offer today in hopes of a better offer later requires patience. Locus of control refers to one’s belief in the ability to control outcomes in one’s life and has implications for search effort decisions – exerting search effort is only worthwhile if it’s expected to pay off, and reduced feelings of self-efficacy over the search spell can lead to reductions in effort. Search problems are complex and cognitively difficult to solve even in simplified theoretical or laboratory versions, so cognitive errors and heuristics likely lead to some suboptimal search behavior in the field. Job search provides repeated feedback about one’s skills and attractiveness in the labor market, so self-image concerns may lead to biased signal processing, such as updating search strategies too slowly after repeated rejections, or to information avoidance, like quitting search to avoid rejections altogether.

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Authors and Affiliations

  1. University of California, Santa Barbara, Santa Barbara, CA, USA

    Michael Cooper & Peter Kuhn

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  1. Michael Cooper
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  2. Peter Kuhn
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Correspondence to Peter Kuhn .

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  1. UNU-MERIT & Princeton University, Maastricht, The Netherlands

    Klaus F. Zimmermann

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  1. GATE, CNRS – University of Lyon, Ecully, France

    Marie Claire Villeval

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Cooper, M., Kuhn, P. (2020). Behavioral Job Search. In: Zimmermann, K. (eds) Handbook of Labor, Human Resources and Population Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-57365-6_116-1

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  • DOI: https://doi.org/10.1007/978-3-319-57365-6_116-1

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