Journal of Labor Research

, Volume 34, Issue 4, pp 433–454

Discouraging Workers: Estimating the Impacts of Macroeconomic Shocks on the Search Intensity of the Unemployed



Discouraged and marginally attached workers have received increasing attention from policy makers over the past several years. Through slackness in the labor market, periods of high unemployment should reduce the likelihood of receiving a job offer and thus create more discouraged workers. However, the existing literature generally fails to find evidence of such pro-cyclicality in search intensity. Surprisingly, search appears to be acyclical. We hypothesize the observed acyclicality may be the result of coarse measurement of search intensity in previous studies and the failure to account for changes in individuals’ wealth across the business cycle. In this paper we use daily time use dairies from the American Time Use Survey 2003–2011 to examine the cyclicality of search intensity to explain this apparent contradiction between theory and data. Results indicate that workers do reduce their search in response to deteriorating labor market conditions, but these effects appear to be offset by the positive effects on search that are correlated with declines in household wealth.


Search intensity Housing prices Discouraged workers Business cycles 
JEL codes J2 J6 J1 E24 E32 


  1. Andolfatto D (1996) Business cycles and labor-market search. Am Econ Rev 86(1):112–132Google Scholar
  2. Blanchard O, Diamond P (1989) The beveridge curve. Brookings PapEcon Act 1:1–76CrossRefGoogle Scholar
  3. Bureau of Labor Statistics (2012) Monthly Employment Situation ReportGoogle Scholar
  4. Bureau of Labor Statistics (2012a) American Time Use Survey 2003–2011. [internet:]
  5. Bureau of Labor Statistics (2012b) Current Population Survey. [internet:]
  6. Bureau of Labor Statistics (2012c) Job Openings and Labor Turnover Survey. [internet:]
  7. Bureau of Labor Statistics (2012d) Mass Layoffs, [internet:]
  8. Department of Labor (2012) State Unemployment Benefits, [internet:]
  9. Dow JCR, Dicks-Mireaux L (1958) The excess demand for labour: a study of conditions in Great Britain, 1946-1956. Oxf Econ Pap 10(1):1–33Google Scholar
  10. Eckstein Z, van den Berg G (2007) Empirical labor search: a survey. J Econ 137:531–564Google Scholar
  11. Gautier P, Moraga-Gonzalez JL, Wolthoff R (2007) “Structural Estimation of Search Intensity: Do Non-Employed Workers Search Enough?” IZA Discussion Paper Google Scholar
  12. Goldin C, Margo R (1992) “The great compression: The U.S. wage structure at mid-century.”. Q J Econ cvii:1–34CrossRefGoogle Scholar
  13. Hagedorn M, Manovskii I (2008) The cyclical behavior of equilibrium unemployment and vacancies revisited. Am Econ Rev 98(4):1692–1706CrossRefGoogle Scholar
  14. Hall RE (2005) Employment fluctuations with equilibrium wage stickiness. Am Econ Rev 95(1):50–65CrossRefGoogle Scholar
  15. Krause M, Lubik T (2011) “On-the-Job Search and the Cyclical Dynamics of the Labor Market.” Working paper: p 1–41Google Scholar
  16. Krueger A, Mueller A (2010) Job search and unemployment insurance: new evidence from time use data. J Public Econ 94:298–307CrossRefGoogle Scholar
  17. Kudlyak M (2010) Are wages rigid over the business cycle? Fed Reserv Bank Richmond Econ Q 96:179–99Google Scholar
  18. Merz M (1995) Search in the labor market and the real business cycle. J Monet Econ 36:269–300CrossRefGoogle Scholar
  19. Mortensen DT (1977) Unemployment insurance and job search decisions. Ind Labor Relations Rev 30(4):505–517CrossRefGoogle Scholar
  20. Mortensen DT (1986) “Job Search and Labor Market Analysis.” Handbook of Labor Economics, vol 2, Ch. 15, Ashenfelter O, Layard R, North-HollandGoogle Scholar
  21. Mortensen DT, Pissaridies C (1994) Job creation and job destruction in the theory of unemployment. Rev Econ Stud 61:397–415CrossRefGoogle Scholar
  22. Pissarides C (2009) The unemployment volitility puzzle: Is wage stickiness the answer? Econometrica 77(5):1339–1369CrossRefGoogle Scholar
  23. Shimer R (2004) “Search intensity.” Unpublished ManuscriptGoogle Scholar
  24. Shimer R (2005) “The cyclical behavior of equilibrium unemployment and vacancies.”. Am Econ Rev 95(1):25–49CrossRefGoogle Scholar
  25. Shimer R (2008) Labor markets and business cycles. Research summary, NBER Reporter, No. 3Google Scholar
  26. Stewart J (2009) “Tobit or Not Tobit?”IZA Discussion Paper: No. 4588Google Scholar
  27. World Bank (2012) World development indicators. [internet:]

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Department of EconomicsElon UniversityElonUSA

Personalised recommendations