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Duration of Unemployment and the

Job Search Methods of the Unemployed

in Europe

2nd EU-Microdata User Conference

Ronald Bachmann

Daniel Baumgarten

Matthias Vorell

Mannheim, 31 March 2011

PROGRESS

• This research is supported for under the European Community

Programme for Employment and Social Solidarity (2007-2013). This

programme is managed by the Directorate-General for Employment,

social affairs and equal opportunities of the European Commission.

• For more information see:

http://ec.europa.eu/employment_social/progress/index_en.htmlhttp://ec.europa.eu/employment_social/progress/index_en.html

• This research does not necessarily reflect the position or opinion of the

European Commission.

2Duration of Unemployment and the Job Search Methods of the Unemployed in Europe04.04.2011

Background

• Many European countries not only plagued by high levels of unemployment but also by high rates of long-term unemployment

• Long-term unemployment

• leads to higher persistence of unemployment at the

macroeconomic levelmacroeconomic level

• may itself reduce the probability of leaving unemployment at

the individual level

• may lead to social exclusion

• Policy aim: stifle the duration of unemployment and assist the unemployed in finding new jobs

• One potential lever: the job search of the unemployed


Job search of the unemployed –

motivation

• Search and matching central to modern theories ofunemployment (e.g. Pissarides 2000)

• Efficiency of matching process crucial for equilibriumunemployment rates

• Individuals can influence efficiency by deciding on

• how much effort to devote to job search

• which search methods to employ


Research questions

1. What are the determinants of overall search intensity?

2. How are different search methods related to each other?

3. What are the determinants of specific search methods?


Literature

• Empirical analyses of job search behaviour (and outcomes):

e.g. Barron and Mellow (JHR 1979); Holzer (JoLE 1988); Clark (OECD 2001); Addison and Portugal (OEP 2002); Weber and Mahringer (Empirical Economics 2008); Caliendo et al. (IZA 2010)

Contributions of our analysis:• Contributions of our analysis:

• detailed cross-country evidence

• special emphasis on household characteristics


Data

• European Union Labour Force Survey (EU-LFS)

• Representative and internationally comparable survey of individual workers in the EU Member States

• Data structure: repeated cross-section

• Yearly frequency (1998 to 2008 for unemployment duration, 2006 to 2008 for job search)


Data limitations

• Duration of unemployment grouped in three intervals (0-5, 6-11, >11 months)

• Search methods only observable for unemployed individuals

� Not possible to link individual information on search methods and � Not possible to link individual information on search methods and

destination states

04.04.2011 Duration of Unemployment and the Job Search Methods of the Unemployed in Europe 8

Search methods considered

• Contacted public employment office to find work

• Contacted private employment agency to find work

• Applied to employers directly

• Asked friends, relatives, trade unions, etc.

• Inserted or answered advertisements in newspapers or journals

• Studied advertisements in newspapers or journals

• Took a test, interview or examination


Search methods not considered

Other search methods contained in the data but not used for the analysis

• Looked for land, premises or equipment

• Looked for permits, licenses, financial resources• Looked for permits, licenses, financial resources

• Awaiting the results of an application for a job

• Waiting for a call from a public employment office

• Awaiting the results of a competition for recruitment to the public sector

• Other method used



empirics

1. What are the determinants of overall search intensity?

� Number of search methods as a proxy for search intensity

� Ordered logit regression

2. How are different search methods related to each other?

� Factor analysis

3. What are the determinants of specific search methods?

� Probit regression


Regression model specifications

� Baseline specification

� Use of micro data for entire sample

� Dependent variable regressed on set of explanatory variables

(individual and household characteristics), including time and

country fixed effects

Use of household variables excludes Denmark, Finland, and Sweden � Use of household variables excludes Denmark, Finland, and Sweden

from the analysis

� (Separate regressions for men and women)

� Extension

� Estimate baseline specification separately for country groups


Search intensity of unemployed job

seekers

LU

DEIT

CYBE

SKBG

ROLT

EESE¹

PT


0.0 1.0 2.0 3.0 4.0 5.0

SI

ATCZ

IEFR

HUNL

PLGR

ES

LVEU-LFS

DKUK

FILU

Ordered logit estimation of search

intensity

Without household variables With household variables

Odds ratio t-value Odds ratio t-value

Male 1.1760 5.61 1.1710 5.66

Age 15-24 Reference category Reference category

Age 25-54 0.9956 -0.12 1.0217 0.72

Age 55-64 0.5661 -3.59 0.5695 -4.01

ISCED 0-2 Reference category Reference category

ISCED 3-4 1.6600 25.35 1.6199 32.65

ISCED 5-6 2.1602 19.48 2.0974 16.60ISCED 5-6 2.1602 19.48 2.0974 16.60

Unemployment duration < 6 months Reference category Reference category

Unemployment duration 6-11 months 1.0659 1.26 1.0652 1.18

Unemployment duration > 11 months 0.8954 -1.85 0.8954 -1.86

Number of adults (15-64 years) in household - - 0.9823 -1.92

Number of children (<=4 years) in household - - 0.9397 -2.22

Number of children (5-14 years) in household - - 0.9277 -4.96

Number of elderly (>= 65 years) in household - - 0.9308 -2.41

No spouse in household Reference category Reference category

Inactive/unemployed spouse in household - - 0.8523 -2.68

Employed spouse in household - - 0.9803 -0.53

Pseudo R2 0.0365 0.0364

Number of Obs. 316,181 289,140


Search intensity by gender

Female Male

Odds ratio t-value Odds ratio t-value

Number of children (<=4 years) in household 0.8606 -3.55 1.0201 0.76

Number of children (5-14 years) in household 0.8917 -5.99 0.9589 -2.08

Number of elderly (>= 65 years) in household 0.9385 -2.17 0.9346 -1.97


Inactive/unemployed spouse in household 0.7614 -8.11 0.8829 -1.31

Employed spouse in household 0.8628 -2.93 1.1718 3.54

Pseudo R2 0.0387 0.0363

Number of Obs. 149,809 139,331


Search intensity by country groups

Women Continental Europe UK, Ireland Mediterranean CEE

Odds ratio t-value Odds ratio t-valueOdds ratio

t-value Odds ratio t-value

Number of children (<=4 years) in household

0.8169 -2.46 0.8811 -183.50 0.9246 -2.31 0.8302 -7.16

Number of children (5-14 years) in household

0.8754 -7.65 0.8273 -78.37 0.8749 -8.75 0.9885 -0.65

Number of elderly (>= 65 years) in household

0.8274 -3.50 0.8884 -50.26 0.9216 -1.62 0.9763 -1.03

No spouse in household Reference category Reference category Reference category Reference category

Inactive/unemployed spouse in household 0.7954 -4.27 0.9089 -12.06 0.6858 -11.83 0.7442 -6.50Inactive/unemployed spouse in household 0.7954 -4.27 0.9089 -12.06 0.6858 -11.83 0.7442 -6.50

Employed spouse in household 0.9458 -0.69 0.7628 -246.84 0.7494 -9.95 0.8733 -2.56


Men

Number of children (<=4 years) in household

1.0374 1.19 1.1411 10.05 0.9514 -2.08 0.9486 -1.94

Number of children (5-14 years) in household

0.9930 -0.20 0.9497 -6.30 0.8815 -5.58 0.9662 -2.25

Number of elderly (>= 65 years) in household

0.9041 -2.31 0.9863 -0.57 0.8972 -1.48 1.0105 0.27

No spouse in household Reference category Reference category Reference category Reference category

Inactive/unemployed spouse in household 0.7721 -1.46 0.9874 -1.16 0.9606 -0.52 0.9573 -0.83

Employed spouse in household 1.1516 1.60 1.2199 46.75 1.2419 3.64 1.1632 7.78

Factor analysis of search methods:

factor loadings

Do we observe the use of search “bundles”?

Factor 1 Factor 2 Factor 3 Uniqueness

Public employment office 0.3295 -0.6557 0.2176 0.4142

Private employment agency 0.1342 -0.0397 0.8358 0.2818

Direct applications to employers 0.2136 0.6803 0.3857 0.3428

Asking friends, relatives, and trade unions, etc. 0.2623 0.7476 0.0547 0.3693

Inserting or answering advertisements 0.8277 -0.0893 0.2408 0.2489

Studying advertisements 0.8578 0.2539 0.0460 0.1975

Taking a test, interview or examination 0.1906 0.3700 0.6284 0.4319


Use of specific search methods by

country groups

UK, Ireland

Mediterranean

Central and Eastern Europe

0 10 20 30 40 50 60 70 80 90 100

Continental Europe

Scandinavia

UK, Ireland

Proportion of individuals using specific search methods (in %)

Inserting/answering advertisements Private employment agency

Direct applications Public employment office


Probit estimation of specific search

methods

Public employment office Direct applications

Marg. Effect t-value Marg. Effect t-value

Male 0.0113 0.71 0.0432 4.53

Age 15-24 Reference category Reference category

Age 25-54 0.0713 4.99 -0.0325 -7.07

Age 55-64 0.0430 1.63 -0.1359 -7.90

ISCED 0-2 Reference category Reference category

ISCED 3-4 0.0146 1.47 0.0823 5.20

ISCED 5-6 -0.0400 -2.01 0.1208 4.53ISCED 5-6 -0.0400 -2.01 0.1208 4.53

Unemployment duration < 6 months Reference category Reference category

Unemployment duration 6-11 months 0.0224 1.05 -0.0045 -0.52

Unemployment duration > 11 months 0.0161 0.58 -0.0380 -3.21

Number of adults (15-64 years) in household -0.0040 -0.55 0.0017 0.73

Number of children (<=4 years) in household 0.0041 0.62 -0.0046 -1.33

Number of children (5-14 years) in household -0.0089 -1.36 -0.0057 -1.73

Number of elderly (>= 65 years) in household 0.0033 0.36 -0.0047 -0.62


Inactive/unemployed spouse in household 0.0356 3.22 -0.0343 -2.26

Employed spouse in household -0.0382 -1.29 -0.0199 -1.41

Pseudo R2 0.1954 0.1351

Number of Obs. 289,140 289,140



summary of results

• Individual characteristics and search

• Individuals with lower age and higher skills search more intensively

and make more use of search methods other than contacting the

public employment office

• Long-term unemployed individuals search less intensively (and

mostly using the public employment office)mostly using the public employment office)

• Household variables

• Important predictors of search intensity

• Individuals living in households with more children and more elderly

persons search less intensively (stronger association for women)

• Non-working couples search less intensively and mostly rely on the

public employment office


Conclusions and potential policy

implications

• Search seems more costly or less worthwhile for women, especially if they have family responsibilities

• Non-working couples are at risk of becoming alienated from the labour market

• Use of public employment office correlated with unfavourable individual characteristicsindividual characteristics

� Potential role for targeted support and facilitation of alternative search channels


Thank you for your attention.

22

Duration of Unemployment and the Job Search Methods of the Unemployed in Europe04.04.2011

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