Working Paper: CEPR ID: DP14414
Authors: Abhijit Banerjee; Sandra Sequeira
Abstract: Youth unemployment remains high throughout the developing world, at times coexisting with unmet demand for labor and high job turnover. This paper examines one possible explanation: young job seekers who live far from the city centres where jobs are located, over-estimate their employment prospects and underestimate actual commuting costs. Increasing access and exposure to the wider labor market leads job seekers to adjust beliefs and accept jobs closer to home. These findings underscore the importance of supply-side information frictions and how they can lead to spatial and occupational mistargeting in the job search.
Keywords: Job Search; Biased Beliefs; Unemployment
JEL Codes: J64; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| job search subsidies (J68) | job seekers adjusting beliefs (J68) |
| job seekers adjusting beliefs (J68) | job acceptance behavior (M51) |
| job search subsidies (J68) | job acceptance behavior (M51) |
| job search subsidies (J68) | downward adjustment in salary expectations (J31) |
| job search subsidies (J68) | downward adjustment in reservation wages (J68) |