Search and Learning in Markets

Abstract

Search is a process of learning and discovery. Consumers search for goods that fit their requirements and budgets, and workers search for jobs commensurate to their skills. Learning can vary by domain—whether a person learns about herself, about the other market participants, about the fit between both, or about the conditions in the larger economic environment; and it can span several domains at the same time. While the search process has traditionally been modeled as a black box where it simply takes time to locate the desired opportunity, recent work and future research will break up this process to be more explicit about the source of the problem. This has been missing partly because it is easier to model environments where everyone and everything is identical. Once it is acknowledged that people, firms and goods are different, that they learn over time about their type, and that the differences interact in important ways, new avenues for research open up. While much of existing work has focused on quantity (i.e., number of jobs found), future work is likely to focus more on the quality (i.e., how valuable is this job to society). This essay discusses which elements might shape the research in this area, and highlights the new lessons that are likely to emerge from this work.

Landing a job, sinking a career? The trade-off between occupational downgrading and quick reemployment according to unemployed jobseekers’ career stage and job prospects

“…These labor markets encourage long-term attachment to an occupation that is much higher than in more permeable labor markets such as the US. Our aim has been to advance a developing avenue of research in the search and matching literature which can be combined with the literature on scar effects from unemployment questioning the 'value' of post-unemployment jobs (Kircher 2015). We contribute to this literature by assessing a trade-off inherent in jobseekers' search between quality of the job found upon reemployment and speed of reemployment.…”

“…A large body of empirical research in economics and sociology has analyzed unemployment duration, rates of job uptake, and the pecuniary consequences of job loss and unemployment (Arulampalam, 2001;Brand, 2015;Gangl, 2006). However, the search trade-off between the matching of occupational prestige post-unemployment relative to pre-unemployment and speed of reemployment, particularly important in occupational labor markets, has received little attention (Kircher, 2015). Evidence from the few recent studies examining the direction of jobseekers' mobility following unemployment or displacement across several OECD countries points to job-quality scars inflicted by unemployment, ranging from lower job authority to status (Bethmann, 2013;Brand, 2006;Dieckhoff, 2011;Lippmann & Rosenthal, 2008).…”