JOB SEARCH IN A DYNAMIC ENVIRONMENT - AN EMPIRICAL-ANALYSIS

A dynamic job search model which allows us to distinguish various effects, such as 'offer' probability effects and leisure effects, on an individual's behaviour is presented and estimated. We find that: (i) there is disutility from being unemployed, especially after the first three months of unemployment; (ii) income receipts other than unemployment benefits and earnings have only a very small effect on the behaviour; (iii) the conditional probability of leaving unemployment shows no sign of decreasing with duration; (iv) the elasticity of expected duration with respect to unemployment benefits in the first three months of the spell is 0.18 for teenage men, 0.13-0.14 for men aged 20-44, 0.08 for men aged 45-54 and 0.06 for men over 55, giving an overall average of 0.12; and (v) these elasticities are zero after the first three months of the spell.