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Digital archive of theses discussed at the University of Pisa


Thesis etd-01152010-210254

Thesis type
Tesi di dottorato di ricerca
Thesis title
Determinants and Incentives in Job Search Models: Some Theoretical and Empirical Contributions
Academic discipline
Course of study
tutor Prof. Casarosa, Carlo
  • Homeownership
  • On-the-Job Training
  • Search Theory
Graduation session start date
Release date
This dissertation presents three different contributions on Job Search Models attempting to identify which are the main determinants and incentives to the equilibrium unemployment.
In these models, unemployment is derived by analyzing the transition flows in and out of unemployment. The key assumption is that the matching process between unemployed workers and firms with vacancies is influenced by frictions such as heterogeneity in skills and locations, information imperfections, slow mobility of labour and capital, and by the actions of firms and workers during recruitment and job search. The model device that captures the influence of frictions on market outcomes is the matching function, which gives the number of job matches at each moment in time in terms of the inputs of firms and workers into search.
Three different papers compose the research. The first one analyzes how a macroeconomic event influences the equilibrium unemployment, while the second one looks at the problem of the investment in human capital through on-the-job training and how this affects the equilibrium. The third contribution is about the search intensity by workers that can be thought of as a “technical change” parameter in the job matching technology.
The first paper explores a simple Job Search Model in order to study the effect of labour productivity shocks on equilibrium market tightness. I introduce a new variable that measures long run Unemployment Income as combination of unemployment benefits available for the unemployed and the “initial wealth” of the workers (i.e. all the sources of wealth not associated with transfer payments in the short run). Making use of an exponential matching function, I derive the equilibrium of the model and verify that higher levels of labour productivity determine higher levels of market tightness or equally higher demand for labor. Furthermore, I show that the positive effect that labour productivity has on unemployment decreases with the generosity of the transfer payments measured by the replacement rate.
The second paper investigates the problem of on-the-job general training investments using a matching model of labour market. I study a model with search frictions and firm-sponsored training where each firm has to support the cost of training and then chooses the optimum training level that maximizes its profits. I verify in equilibrium that low training levels provided by firms are associated with imperfect labour markets only when the productivity function presents decreasing returns to training. When this assumption holds, I demonstrate that more regulated labour markets imply higher training investments. I use a dataset taken the Labour Force Survey in order to verify empirically the relation between training and unemployment across English regions, Wales and Scotland. Empirical evidence suggests that in the majority of regions a negative correlation between the unemployment rate and Job Related Training. There are, however, some regions, like London, where these negative effects are reversed.
The third paper investigates the relation between job search intensity of non-employed and housing tenure. I test this relation exploiting the UK Jobseeker's Allowance reform introduced in UK 1996, whose main aspect was a strengthening of search requirements for entitlement to the unemployment benefits. To investigate the impact of tighter job search requirements I use a simple search model, where I introduce moving costs and housing costs in order to capture the two opposite channels through which the degree of attachment to the accommodation affects search behaviour. Using a Difference-in-Differences approach on a dataset drawn from the Labour Force Survey, I analyze the impact of the reform on the claimant outflow. Empirical evidence from the dataset suggests that the impact of the reform is related to housing tenure. Specifically, renters account for a major portion of claimants who were crowded out the benefits without finding a job, while the effect on outright owners and mortgagers is lower.