Employed and unemployed job seekers: Are they substitutes?

Simonetta Longhi, Mark Taylor
University of Essex, UK

The job search literature suggests that an increase in the proportion of job seekers who are employed reduces the probability of unemployed people finding a job. However, there is yet no evidence that employed and unemployed job seekers are similar in their observed characteristics, or even that they apply for the same jobs. We use the British Labour Force Survey (LFS) from 1984 to 2009 to compare different groups of job seekers: employed, unemployed and temporarily inactive. We find that these different types of job-seekers differ in their individual characteristics, preferences over working hours, and job-search strategies, and that such differences do not vary with the business cycle. Unemployed people are more likely to be in competition with other unemployed and with temporarily inactive job seekers, than with employed job seekers.

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