Working Paper: CEPR ID: DP4515
Authors: Bas van der Klaauw; Aico van Vuuren; Peter Berkhout
Abstract: In this Paper, we develop a structural model for the job search behaviour of students entering the labour market. The model includes endogenous search effort and on-the-job searches. Since students usually do not start a regular job before graduation but start job searches earlier, our model is non-stationary even if all structural parameters are constant. The model explains the common finding that a substantial share of individuals start working immediately upon graduation. We estimate the model using a unique data set of individuals who completed undergraduate education in the Netherlands between 1995 and 2001. Our estimation results show that a 1% decrease in unemployment rate increases wage offers by 3%, that there are substantial returns to work experience and that individuals devote less effort to job search than optimal. Employment rates at graduation could be increased from 40% to 65% if all individuals start job searches 6 month prior to graduation.
Keywords: business cycle; return to work experience; structural estimation
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unemployment rate (J64) | wage offers (J31) |
| work experience (M53) | wage offers (J31) |
| job search effort (J68) | employment outcomes (J68) |
| early job search initiation (L26) | employment rates (J68) |