The Behavioral Economics of Job Search During Unemployment: New Field Evidence on Search and Psychological Frictions

Conell-Price Lynn, Pittsburgh PA

Investigators

Abstract

This award was provided as part of NSF's Social, Behavioral and Economic Sciences Postdoctoral Research Fellowships (SPRF) program and is supported by the Economics program. The goal of the SPRF program is to prepare promising, early career doctoral-level scientists for scientific careers in academia, industry or private sector, and government. SPRF awards involve two years of training under the sponsorship of established scientists and encourage Postdoctoral Fellows to perform independent research. NSF seeks to promote the participation of scientists from all segments of the scientific community, including those from underrepresented groups, in its research programs and activities; the postdoctoral period is considered to be an important level of professional development in attaining this goal. Each Postdoctoral Fellow must address important scientific questions that advance their respective disciplinary fields. Under the sponsorship of Dr. Saurabh Bhargava at Carnegie Mellon University, this postdoctoral fellowship award supports an early career scientist studying job search behavior. Specifically, the present research explores the psychological factors that influence job search during unemployment. Many people find the experience of searching for work unpleasant and discouraging. The proposed research aims to test these assumptions and to provide new insights on the psychological mechanisms that might hinder the best possible job-search behaviors. These insights can directly inform the types of policies used to improve search behavior and speed up the pace at which job-seekers find suitable employment. This project aims to contribute to economists' understanding of job search behavior by testing basic assumptions about the optimality of search effort and strategy and the assumed irrelevance of psychological factors such as discouragement. One reason that behavioral insights have been slow to affect labor economics is the difficulty of capturing labor market dynamics realistically in the laboratory. This research will address this gap by leveraging access to real-world data on the online job search behavior of several hundred thousand job seekers, and a field experiment with unemployed job seekers. Collectively, this will provide new evidence on (i) how individuals search, including effort and search wages, (ii) the optimality of such search relative to a benchmark of the standard model, and (iii) the psychological consequences of unemployment and their effect on search. Further, it will test psychologically informed interventions intended to improve job outcomes. Evidence on whether unemployed job seekers search suboptimally for work and, if so, what specific interventions can improve search will have implications for how economic theory should model job search decisions and unemployment. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.