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Duration of Unemployment and the
Job Search Methods of the Unemployed
in Europe
2nd EU-Microdata User Conference
Ronald Bachmann
Daniel Baumgarten
Matthias Vorell
Mannheim, 31 March 2011
PROGRESS
• This research is supported for under the European Community
Programme for Employment and Social Solidarity (2007-2013). This
programme is managed by the Directorate-General for Employment,
social affairs and equal opportunities of the European Commission.
• For more information see:
http://ec.europa.eu/employment_social/progress/index_en.htmlhttp://ec.europa.eu/employment_social/progress/index_en.html
• This research does not necessarily reflect the position or opinion of the
European Commission.
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Background
• Many European countries not only plagued by high levels of unemployment but also by high rates of long-term unemployment
• Long-term unemployment
• leads to higher persistence of unemployment at the
macroeconomic levelmacroeconomic level
• may itself reduce the probability of leaving unemployment at
the individual level
• may lead to social exclusion
• Policy aim: stifle the duration of unemployment and assist the unemployed in finding new jobs
• One potential lever: the job search of the unemployed
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Job search of the unemployed –
motivation
• Search and matching central to modern theories ofunemployment (e.g. Pissarides 2000)
• Efficiency of matching process crucial for equilibriumunemployment rates
• Individuals can influence efficiency by deciding on
• how much effort to devote to job search
• which search methods to employ
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Research questions
1. What are the determinants of overall search intensity?
2. How are different search methods related to each other?
3. What are the determinants of specific search methods?
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Literature
• Empirical analyses of job search behaviour (and outcomes):
e.g. Barron and Mellow (JHR 1979); Holzer (JoLE 1988); Clark (OECD 2001); Addison and Portugal (OEP 2002); Weber and Mahringer (Empirical Economics 2008); Caliendo et al. (IZA 2010)
Contributions of our analysis:• Contributions of our analysis:
• detailed cross-country evidence
• special emphasis on household characteristics
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Data
• European Union Labour Force Survey (EU-LFS)
• Representative and internationally comparable survey of individual workers in the EU Member States
• Data structure: repeated cross-section
• Yearly frequency (1998 to 2008 for unemployment duration, 2006 to 2008 for job search)
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Data limitations
• Duration of unemployment grouped in three intervals (0-5, 6-11, >11 months)
• Search methods only observable for unemployed individuals
� Not possible to link individual information on search methods and � Not possible to link individual information on search methods and
destination states
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Search methods considered
• Contacted public employment office to find work
• Contacted private employment agency to find work
• Applied to employers directly
• Asked friends, relatives, trade unions, etc.
• Inserted or answered advertisements in newspapers or journals
• Studied advertisements in newspapers or journals
• Took a test, interview or examination
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Search methods not considered
Other search methods contained in the data but not used for the analysis
• Looked for land, premises or equipment
• Looked for permits, licenses, financial resources• Looked for permits, licenses, financial resources
• Awaiting the results of an application for a job
• Waiting for a call from a public employment office
• Awaiting the results of a competition for recruitment to the public sector
• Other method used
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Job search of the unemployed –
empirics
1. What are the determinants of overall search intensity?
� Number of search methods as a proxy for search intensity
� Ordered logit regression
2. How are different search methods related to each other?
� Factor analysis
3. What are the determinants of specific search methods?
� Probit regression
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Regression model specifications
� Baseline specification
� Use of micro data for entire sample
� Dependent variable regressed on set of explanatory variables
(individual and household characteristics), including time and
country fixed effects
Use of household variables excludes Denmark, Finland, and Sweden � Use of household variables excludes Denmark, Finland, and Sweden
from the analysis
� (Separate regressions for men and women)
� Extension
� Estimate baseline specification separately for country groups
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Search intensity of unemployed job
seekers
LU
DEIT
CYBE
SKBG
ROLT
EESE¹
PT
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0.0 1.0 2.0 3.0 4.0 5.0
SI
ATCZ
IEFR
HUNL
PLGR
ES
LVEU-LFS
DKUK
FILU
Ordered logit estimation of search
intensity
Without household variables With household variables
Odds ratio t-value Odds ratio t-value
Male 1.1760 5.61 1.1710 5.66
Age 15-24 Reference category Reference category
Age 25-54 0.9956 -0.12 1.0217 0.72
Age 55-64 0.5661 -3.59 0.5695 -4.01
ISCED 0-2 Reference category Reference category
ISCED 3-4 1.6600 25.35 1.6199 32.65
ISCED 5-6 2.1602 19.48 2.0974 16.60ISCED 5-6 2.1602 19.48 2.0974 16.60
Unemployment duration < 6 months Reference category Reference category
Unemployment duration 6-11 months 1.0659 1.26 1.0652 1.18
Unemployment duration > 11 months 0.8954 -1.85 0.8954 -1.86
Number of adults (15-64 years) in household - - 0.9823 -1.92
Number of children (<=4 years) in household - - 0.9397 -2.22
Number of children (5-14 years) in household - - 0.9277 -4.96
Number of elderly (>= 65 years) in household - - 0.9308 -2.41
No spouse in household Reference category Reference category
Inactive/unemployed spouse in household - - 0.8523 -2.68
Employed spouse in household - - 0.9803 -0.53
Pseudo R2 0.0365 0.0364
Number of Obs. 316,181 289,140
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Search intensity by gender
Female Male
Odds ratio t-value Odds ratio t-value
Number of children (<=4 years) in household 0.8606 -3.55 1.0201 0.76
Number of children (5-14 years) in household 0.8917 -5.99 0.9589 -2.08
Number of elderly (>= 65 years) in household 0.9385 -2.17 0.9346 -1.97
No spouse in household Reference category Reference category
Inactive/unemployed spouse in household 0.7614 -8.11 0.8829 -1.31
Employed spouse in household 0.8628 -2.93 1.1718 3.54
Pseudo R2 0.0387 0.0363
Number of Obs. 149,809 139,331
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Search intensity by country groups
Women Continental Europe UK, Ireland Mediterranean CEE
Odds ratio t-value Odds ratio t-valueOdds ratio
t-value Odds ratio t-value
Number of children (<=4 years) in household
0.8169 -2.46 0.8811 -183.50 0.9246 -2.31 0.8302 -7.16
Number of children (5-14 years) in household
0.8754 -7.65 0.8273 -78.37 0.8749 -8.75 0.9885 -0.65
Number of elderly (>= 65 years) in household
0.8274 -3.50 0.8884 -50.26 0.9216 -1.62 0.9763 -1.03
No spouse in household Reference category Reference category Reference category Reference category
Inactive/unemployed spouse in household 0.7954 -4.27 0.9089 -12.06 0.6858 -11.83 0.7442 -6.50Inactive/unemployed spouse in household 0.7954 -4.27 0.9089 -12.06 0.6858 -11.83 0.7442 -6.50
Employed spouse in household 0.9458 -0.69 0.7628 -246.84 0.7494 -9.95 0.8733 -2.56
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Men
Number of children (<=4 years) in household
1.0374 1.19 1.1411 10.05 0.9514 -2.08 0.9486 -1.94
Number of children (5-14 years) in household
0.9930 -0.20 0.9497 -6.30 0.8815 -5.58 0.9662 -2.25
Number of elderly (>= 65 years) in household
0.9041 -2.31 0.9863 -0.57 0.8972 -1.48 1.0105 0.27
No spouse in household Reference category Reference category Reference category Reference category
Inactive/unemployed spouse in household 0.7721 -1.46 0.9874 -1.16 0.9606 -0.52 0.9573 -0.83
Employed spouse in household 1.1516 1.60 1.2199 46.75 1.2419 3.64 1.1632 7.78
Factor analysis of search methods:
factor loadings
Do we observe the use of search “bundles”?
Factor 1 Factor 2 Factor 3 Uniqueness
Public employment office 0.3295 -0.6557 0.2176 0.4142
Private employment agency 0.1342 -0.0397 0.8358 0.2818
Direct applications to employers 0.2136 0.6803 0.3857 0.3428
Asking friends, relatives, and trade unions, etc. 0.2623 0.7476 0.0547 0.3693
Inserting or answering advertisements 0.8277 -0.0893 0.2408 0.2489
Studying advertisements 0.8578 0.2539 0.0460 0.1975
Taking a test, interview or examination 0.1906 0.3700 0.6284 0.4319
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Use of specific search methods by
country groups
UK, Ireland
Mediterranean
Central and Eastern Europe
0 10 20 30 40 50 60 70 80 90 100
Continental Europe
Scandinavia
UK, Ireland
Proportion of individuals using specific search methods (in %)
Inserting/answering advertisements Private employment agency
Direct applications Public employment office
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Probit estimation of specific search
methods
Public employment office Direct applications
Marg. Effect t-value Marg. Effect t-value
Male 0.0113 0.71 0.0432 4.53
Age 15-24 Reference category Reference category
Age 25-54 0.0713 4.99 -0.0325 -7.07
Age 55-64 0.0430 1.63 -0.1359 -7.90
ISCED 0-2 Reference category Reference category
ISCED 3-4 0.0146 1.47 0.0823 5.20
ISCED 5-6 -0.0400 -2.01 0.1208 4.53ISCED 5-6 -0.0400 -2.01 0.1208 4.53
Unemployment duration < 6 months Reference category Reference category
Unemployment duration 6-11 months 0.0224 1.05 -0.0045 -0.52
Unemployment duration > 11 months 0.0161 0.58 -0.0380 -3.21
Number of adults (15-64 years) in household -0.0040 -0.55 0.0017 0.73
Number of children (<=4 years) in household 0.0041 0.62 -0.0046 -1.33
Number of children (5-14 years) in household -0.0089 -1.36 -0.0057 -1.73
Number of elderly (>= 65 years) in household 0.0033 0.36 -0.0047 -0.62
No spouse in household Reference category Reference category
Inactive/unemployed spouse in household 0.0356 3.22 -0.0343 -2.26
Employed spouse in household -0.0382 -1.29 -0.0199 -1.41
Pseudo R2 0.1954 0.1351
Number of Obs. 289,140 289,140
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Job search of the unemployed –
summary of results
• Individual characteristics and search
• Individuals with lower age and higher skills search more intensively
and make more use of search methods other than contacting the
public employment office
• Long-term unemployed individuals search less intensively (and
mostly using the public employment office)mostly using the public employment office)
• Household variables
• Important predictors of search intensity
• Individuals living in households with more children and more elderly
persons search less intensively (stronger association for women)
• Non-working couples search less intensively and mostly rely on the
public employment office
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Conclusions and potential policy
implications
• Search seems more costly or less worthwhile for women, especially if they have family responsibilities
• Non-working couples are at risk of becoming alienated from the labour market
• Use of public employment office correlated with unfavourable individual characteristicsindividual characteristics
� Potential role for targeted support and facilitation of alternative search channels
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