OXFORD BULLETIN OF ECONOMICS AND STATISTICS.

51, 3 (1989}
0305-9049 $3,00

JOB SEARCH METHODS, INTENSITY AND

EFFECTS^

Stephen R. G. Jones

This paper uses detailed survey evidence to examine the process of job
search, addressing particularly the methods and intensity of such search and
the effectiveness of these decisions. Although there is no an extensive
empirical literature on search in labour markets,' the questions of intensity
and search type have been comparatively neglected, often because such data
were not available. But such studies as have been done suggest that the choice
of both method and intensity may play an important role, in addition to
decisions about reservation wages.- The primary purpose of this work is to
extend this earlier research and to apply it to a unique set of data collected in
Great Britain in September 1982, at which time the registered unemployment
rate was 13.8 percent.
Two questions are central to the analysis. First, we are interested in
documenting the technology of search, specifically the relation of inputs to
output. Seater (1979) emphasized the importance of diminishing returns for
the orthodox model of search, deriving it from a spatial view of worker search
for a suitable firm, and several authors (e.g., Barron and Gilley, 1981,
Chirinko, 1982) have investigated this relation empirically. Recent work on
general equilibrium search models, such as that of Diamond (1982) or
Pissarides (1985), puts this issue yet more in the foreground since, in such a
framework, the possibility of multiple equilibria hinges on the nature of the
search technology. The present work investigates this question both for the
aggregate of search inputs and also for a disaggregated model where different
job search methods may have different effects at the margin.
Second, we address whether differential use of various search methods
plays a role in creating different labour market outcomes for various groups.
With its roots in the older 'formal-informal' distinction promoted by Rees
^This work was initiated while visiting the Institute for Advanced Study, Princeton. NJ, I
would like to thank the Institute for Advanced Study and the Social Sciences and Humanities
Research Cound! of Canada (Research Grant No, 410-84-0345) for research support, I would
aiso like to thank Chris McKenna and an anonymous referee for useful comments,

' See for example Kiefer and Neumann (1979), Heckman and Singer (1982). and Lancaster
and Chesher( 1983a).
-The principal empirical studies of variable intensity include Barron and Gilley (1981).
Barron and Mellow (1979). Blau and Robins (1986), Chirinko (1982). Holzer (1986a, 1986b.
1986c), Kahn and Low (1984), Reid (1972), St Louis, Burgess and Kingston (1986), and Yoon
(1981),
278 BULLETIN
(1966) and others, this issue remains little explored, perhaps owing to a lack
of good evidence on the subject.-^ We investigate the choices made by
various categories of the unemployed population with respect to search
method and look at the effectiveness of these choices in generating job
contacts and job offers.
At the outset, we caution that, as with any survey of the stock of the
currently unemployed, some care is required in the interpretation of its
results.'' First, this type of survey will be characterized byright-censoring,so
the initiation date of the spell but not its terminal date is known. Second,
there will also be the fxjtential for length-biased sampling, since the likeli-
hood that long spells are interrupted by a point-sampling scheme is greater
than that for short spells.' Third, assessment of the efficacy of search
methods will inevitably be complicated by the nature of the survey. If we hold
other observed characteristics constant, a person with few hours of search, a
high reservation wage, a poor ability to translate search effort into interviews,
or a poor ability to convert interviews into acceptable job offers wUl have a
disproportionate probability of remaining unemployed and hence of entering
into this sample. This means that care must be taken in the interpretation of
the results, since they are conditional on this sample selection mechanism,
and in general one would expect this to have an effect on the results.
However, despite these difficulties, there is important information in this
survey, information which is simply not available from data sets without this
sample selection problem.*^
The body of the paper is organized as follows. In Section II we document
the amount and type of search that subjects in the study reported, discuss the
relationship between these reported search inputs and reported reservation
wages, and estimate an equation determining the hours choice. We then look
at two types of reported outcomes of search, job interviews and (rejected) job
offers, in Section 111. Under the hypothesis that these figures represent arrival
rates, in the conventional typology of arrival rates and wage offer distribu-
tions, we investigate econometrically the determinants of these two rates.
Overall, ourfindingssuggest very weakly diminishing returns to search in the
aggregate, with one search method being a notable and perhaps puzzling
exception. Further, neither interviews nor offers seem strongly related to the
benefit level, given the other factors. Section IV contains a brief summary.
'Notable exceptions are a series of papers by Holzer (1986a, 1986b, 1986c) and recent
work by Blau and Robins (1986),
•"Lancaster and Chesher (i983b) offer a particularly clear exposition of the differences
induced by sampling from the flow into unemployment, swnpling from the stock of the
unemployed, and sampling from the labour force as a whole without regard to employment/
unemployment status,
-'Fiinn (1986) is a useful summary and illustration of prcKedures available for maximum
likelihood estimation of speil length distributions using these types of data,
'' A further difficulty raised by a referee is that, in any survey, the characteristics of respon-
dents may differ systematically from those of the population as a whole. This may be a problem,
it is suggested, with a sample of the longer term unemployed, but, of course, we cannot asesss
this (nor correct it) using these survey data.
 JOB SEARCH METHODS, INTENSITY AND EFFECTS 279
II. SEARCH INPUTS AND RESERVATION WAGES

A general model of the process of job search will involve choices along a
variety of margins. First, and most studied, there is the choice of a reservation
wage. Second, there is also a decision to be made about the intensity of
search, measured either in terms of inputs — hours, money, etc. — or by look-
ing at intermediate outputs such as applications to employers or job inter-
views; it seems more natural to employ inputs as the choice variable, though
we investigate both approaches below. Third, agents often also face a choice of
how to search, by friends and informal contacts, for example, or through
more formal job-seeking channels.'' We are interested in this section in
documenting the nature of these various simultaneous choices of inputs,
turning to models that address the determinants of these choices in the sec-
tion that follows.
The data in this study were collected in a survey of just over 1,000
unemployed persons conducted in Great Britain in September 1982
(Economist Intelligence Unit 1982).*' The population was constructed by
quota-sampling according to age, sex and unemployment duration to be
representative of the registered unemployed in Britain at that time. From this
group, we use only those observations with valid responses to all the
questions we use, which cuts our final sample size to 709.** We presume that
the incidence of invalid responses is independent of the nature of other
responses, so that this sample selection criterion affects only the accuracy of
our estimates.
The detailed evidence we have on search time inputs comes from
responses to the question, 'Over the course of the last 7 days, how many
hours have you spent in looking for a job in each of these ways?' Subjects
were then prompted with ten possible job search methods, and were also
given the opportunity to add another type in an 'open' category. We have
grouped these 11 responses into five somewhat broader categories, namely,
search by Friends, at the Job Centre, by direct application to Firms, through
Advertisements, and by Other methods.'"
and Low (1988) empirically analyse a further distinction between systematic" and
random' search, these being, respectively, search utilizing prior information about firm-specific
offer distributions and search based only on the overall economy-wide distribution of wage
offers.
''The data employed in this study are available upon reque.st from the author and upon
supply of an IBM formatted diskette.
' The one exception to this is that we included persons who. while reporting vaiid answers for
all other questions, failed to give a reason for the separation from the last job.
'"The exact definitions of categories that were offered to subjects, together with our group-
ing of these categories, are as follows: Friends — "Asked around friends, relatives or other
people you know'. Job Centre — 'Contacted a Job Centre, empioyment office or the PER", or
"Contacted Careers Office. Youth Employment Office*. Firms — 'Contacted firms direct, on the
off-chance they might have something going". Advertisements — 'Looked at job ads in national
newspapers', or 'Looked at job ads in local newspapers', or 'Looked at job ads in magazines', or
"Looked at job ads in shop windows'. Other — "Contacted a private employment agency or
bureau', or "Contaicted a trade union about jobs', or'Other'. (Economist Intelligence Unit 1982.
Main Questionnaire, Question 38).
280 BUU£T1N
Turning first to Table 1, the mean total weekly hours of search is slightly
iinder six, somewhat lower than that found in the US studies (e.g., Barron and
Mellow (1981), p. 432). The breakdown of this total according to the five
search methods has, overall, 15 percent of search time used to inquire
through Friends, 33 percent used via the Job Centre, 12 percent via direct
application to Firms, 32 percent via Advertisements, and the balance, 7
percent of the time, using Other methods. We also detail how these mean
responses vary according to reason for last job separation, using a straight-
forward job loser/job leaver dichotomy." Perhaps surprisingly, since we had
earlier found that reservation wage choices did vary systematically between
these two groups using an overlapping data set (Jones 1988b), there is no
evidence that either the total hours reported or its composition differ across
these two categories. The last two rows give a breakdown by sex, with men
searching quite a bit more, on average, than women. This difference derives
largely from the first three categories, with stronger ties to the world of work
making search by Friends or directly to Firms more feasible. Overall, the data
in Table 1 suggest that it may be comparatively easy to acquire any relevant
information about available jobs: search is by no means a full-time activity.
We look at how these figures vary cross-sectionally with elapsed
unemployment duration in Table 2. In the final column, the total hours

TABLE 1
Hours of Search of Various Types"

Search type

Group Friends Job Centre Firms Advertisements Other Total

Whole sample 0.876 1.920 0.718 1.863 0.429 5.805

IN=7O9) (1.926) (2.661) (1.950) (2.947) (1.298) (6.677)
Job losers 0.891 1.817 0.780 1.791 0.434 5.712
(;V=459) (1.929) (2.375) (1.964) (2.769) (1.249) (6.359)
Job leavers 0.855 1,966 0.638 1.915 0,426 5.800
(A'=235) (L969) (2.975) (1.977) (3.211) (1.419) (7.220)
Male 0.957 2.003 0.852 1.821 0.431 6.065
(Af=541) (2.075) (2.819) (2.164) (2.843) (1.368) (7.023)
Female 0.613 1.649 0.286 2.000 0.423 4.970
(^=168) (1.313) (2.054) (0.856) (3.267) (1.047) (5.349)

NOTE:
' Figures ^ven are means and standard deviations of hows of search of each type in the past
seven days. Sample and sub-sample sizes are reported in parentheses in the first coluttin.

'' Job leavers had one of the following five reasons for tfieir last job separation: (i) personal,
(ii) sickness/health, (iii) financial, (iv) college/further educMion, and (v) other quits. Job losers
had one of the foUowing five reasons for their last job separation: (i) tnade redundant, (ii)
dismissed/sacked, (iil) end of contract scheme, (iv) end of a fixed period Govenunent work
experience scheme; and (v) end of a temporary/summer job.
 JOB SEARCH METHODS. INTENSITY AND EFFECTS 281
reported doe.s decline to some degree with spell length, although the effect is
notably weak. Even for the 99 person.s unemployed for over two years, a
mean of 5.3 hours of search per week is recorded, not much lower than the
mean of the whole sample. We also have data, not reported here, that asked
the subjects about hours of search 'when you first became unemployed", with
prompted responses according to the same 11 ,search categories. These
numbers are in general larger, as might be expected, and the difference
between this figure and 'hours in the past 7 days' is slightly increasing in spell
length. But doubt about recall ability, especially over such long spell lengths,
make us wary of reading too much into these reports. One other feature of
the Table 2 data worthy of comment is that the decline in hours of search with
growing spell length is especially marked for search by Friends and via Firms,
In both cases, as an unemployment spell continues, the network of contacts
with those in employment tends to be weakened, lowering the likely produc-
tivity of such methods. Of course, as we noted at the outset, it may be that
these conclusions arise, in part, from the stock sampling design of the present
survey. To the extent that those with longer search hours find jobs more
quickly than those with short search hours, the former group will be under-
represented in this type of sample.

TABLE 2
Hours of Search of Various Types Categorized by Unemployment Duration"

Search type

Elapsed duration Friends Job Centre Firms Advertisements Other Total

<.3 1,147 2.246 1,076 1,948 0.526 6,943

(W=211) (2,105) (2,961) (2,452) (3,013) (1.405) (7,526)
4-6 0,808 1.827 0,510 1.606 0.500 5.250
(Ar=104) (1.741) (2.375) (1.372) (2,616) (1,441) (5,665)
7-9 0.800 2.250 0.367 2,167 0,600 6,183
(N=60) (1,459) (3,133) (0.920) (3.538) (1,719) (6,754)
10-12 0.675 1.863 0,538 2,488 0,225 5,788
{N=80) (1.727) (2,671) (1.517) (3,718) (0,636) (6,415)
13-18 0.744 1.663 0.523 1,663 0,314 4.907
(N = 86) (2.087) (2,156) (1.636) (2,953) (1,239) (6.359)
19-24 0.594 1.652 0,710 1.304 0,391 4,652
{N=69) (1.468) (2.490) (2.037) (1,768) (1.364) <5.363)
>24 0.889 1.576 0,707 1,828 0.333 5.333
(/V=99) (2.213) (2.429) (2,139) (2.642) (0.969) (6.805)

NOTE:
' Figures given are means and standard deviations of hours of search of each type in the past
seven days. Elapsed duration of unemployment is measured in months. Sub-sample sires are
reported in parentheses in the first coiumn.
282 BULLETIN
Given the slight decline in total search input with duration, it is of interest
to examine the extent of discouragement among this unemployed sample.
One clear indication of this is the proportion of people who report conduct-
ing no search whatsoever in the past 7 days; these figures are given in Table^3.
Overall, almost 20 percent of those studied reported zero total hours, job
leavers having a higher 'drop-out rate' than job losers, in this cross-section,
and men recording a somewhat greater degree of discouragement than
women. By spell length, this proportion rises quite markedly, as we might
expect, almost doubling from tlie shortest to the longest duration group.
A further object of study is how these method and intensity choices
interact with decisions about reservation wages. In the theoretical literature
on search with variable intensity, few clear predictions about this emerge
without rather special and artificial assumptions (see, e.g. Benhabib and Bull,
1983; Morgan, 1983), so we do not think it feasible to use how these multi-
variate choices relate to demographics, etc., to construct a test of search
theory.'- However, an important first step is to document the nature of these
decisions.
The reservation wage variable we employ comes from subjects' responses
to the following question: 'What is the lowest amount in take-home pay you
would be prepared to accept from a new job?' Answers were given in 13 ranges
and we used midpoints for the closed intervals; for the lowest and highest
categories we arbitrarily used £25 for the range below £30 per week and
£225 for the range above £200.'^ Of course, we wish to evaluate these reserv-
ation wages relative to some indicator of the person's earnings ability. One
natural choice, which we adopt, is to use the person's own reported last wage,

TABLE 3
Proportions Reporting Zero Total Hours of Search

By elapsed duration
Group Proportion (months) Proportion

Whole sample 0.196 <.2, 0.156

Job losers 0.196 4-6 0.183
Job leavers 0.209 7-9 0.133
Men 0.200 10-12 0.175
Female 0.185 13-18 0.233
19-24 0.246
>24 0.283

'-Since completing the first version of this paper, we have seen recent preliminary and
incomplete work by Albrecht, Holmlund and Lang (1988a, 1988b) that does offer promise of
estimating a structural model of this sort.
'-* We note the potential for misunderstanding and/or mi^eporting of such reservation wage
figures, as in almost all survey data, but doubt that these cottcems are especially important in
the present case. See Jones (1988a) for detailed discussion of this issue.
 JOB SEARCH METHODS. INTENSITY AND EFFECTS 283
adjusting it using the (whole economy) average earnings index to account for
changes in earnings since that job ended. This has the advantage of being
precisely conditioned on all of that person s characteristics, but the potential
problem of being endogenously related to present employment status, both
for job losers and job leavers. However, fitting a standard wage equation
based on demographics, human capital variables and industry and regional
characteristics using the past wage data and then predicting a past wage proxy
on the basis of this equation did not produce any significant change in the
results.
We construct the reservation wage ratio (RWR) by dividing the reservation
wage by this adjusted past wage. Overall, it has a mean of 1.033 in the sample
and is quite dispersed around this value with a standard deviation of 0.555.
Table 4 uses ten ranges for this RWR and reports mean hours of search
overall and according to the five search methods for each of these ten groups.

TABLE 4
Hours of Search and Reservation Wage Ratios"

Search type
Reservation wage
ratios Friends Job Centre Firms Advertisements Other Total

<0.6 0.868 1,890 0,934 1,989 0.571 6,253

(Af=91) (2.045) (2,652) (2.230) (3.582) (1,529) (7,289)
0.6-0.7 1.295 1,750 0,523 1,386 0,364 5,318
(/V=44) (2.474) (2,344) (1.320) (1,715) (1,348) (5,810)
0,7-0.8 0.622 1,431 0,631 1,600 0.262 4,585
(iV=65) (1.326) (2,298) (2,066) (2,120) (0,871) (5,129)
0.8-0.9 0.798 2,064 0.532 1.500 0,351 5,245
(/V=94) (1.887) (2,972) (1.326) (2,098) (1.114) (5,681)
0.9-1.0 1.265 2,150 1.168 2.496 0,469 7.549
(N=IU) (2.460) (2,483) (2.618) (3,423) (1,396) (7.129)
1.0-1.1 0.900 1.800 0.500 1,900 0,500 5.600
(A'=60) (2.031) (2.399) (1.501) (2.892) (1.557) (7.337)
1.1-1.2 0.571 2,018 0.304 1.250 0.304 4.446
(A'=56) (1.767) (3,211) (0.807) (2,406) (0,913) (5.930)
1.2-1.3 0.568 2,514 0.595 2,514 0,676 6.865
(Af=37) (1.214) (2,864) (1,691) (3,877) (1.313) (7,009)
1.3-1.4 0.784 1,892 0.568 1.838 0.405 5.486
(/V=37) (1.315) (2,413) (1,365) (2.522) (1.499) (7,179)
>1.4 0.753 1,910 0,562 1.258 0.371 4,854
(^=89) (1.667) (2.960) (1,924) (1.997} (1,274) (6,588)

JVOTE;
" Figures given are means and standard deviations of hours of search of each type in the past
seven days, categorized by range of the reservation wage ratio. Oniy persons reporting a valid
pa.st wage figure are included in this Table, See !ext for description of RWR, Sub-sample sizes
are reported in paroitheses in the first colutnn.
284 BULLETIN
There is no obvious pattern in these data, however, either between the RWR
and total hours or between the RWR and the use of each of the different
methods. The highest mean total search input is actually recorded by those
with an RWR in the 0.9-1.0 range, although the differences are never very
large. Overall, the mean of total hours for those with an RWR no greater than
unity is 6.012 (s.d. 6.488), while the mean total hours for the complement of
this sample is 5.283 (s.d. 6.761).
Finally, we give a preliminary investigation of the determinants of these
hours choices, both by method and in aggregate. The variables used in this or
subsequent estimation are detailed in Table 5 and are for the most part self-
explanatory. The Contacts variables measure mean reported interviews per
week over the whole elapsed spell of unemployment, and Other Unemployed
is a dummy variable that takes the value 1 if the subject reports the presence
of another unemployed person in the household and 0 otherwise. The
Benefits variable is constructed by taking a subject's reports on the types of
benefits being received (the actual amounts were not ascertained in this
survey) and then applying the rules and benefit levels operative in September
1982 to determine the monetary figure, given that subject's socio-economic
position.
The first set of econometric results is given in Table 6, where estimates of a
number of models of the determinants of hours choices are presented. For
total hours, the principal determinants seem to be the level of benefits and the
local unemployment rate, on the negative side, while being male or having a

TABLE 5
Means and Standard Deviations of Variables Used in Estimation

Log res wage 4.200 Experience 3.697

(0,397) (5.322)
Age (years) 32.583 Total contacts 0.176
(13.115) (0.599)
Male (dummy) 0.763 Friends contacts 0.015
(0.426) (0.080)
Married (dummy) 0,496 Job Centre contacts 0,077
(0,500) (0.399)
Education (years) 10.980 Finn contacts 0.029
(3.622) (0,174)
Technical (dummy) 0.227 Advertisemojts contacts 0,042
(0.419) (0.228)
Local [/rate (%) 14.292 Other contacts 0,013
(2.877) (0.147)
Rejections 0.244 Benefits 34.840
(0.722) (25.016)
[/Length (months) 12.209 Other unernjrtoyed (dummy) 0.190
(13.177) (0.393)
 JOB SEARCH METHODS. INTENSITY AND EFFECTS 285
technical qualification each exert a statistically significant positive effect on
the choice of intensity. A potential problem with such estimates arises, of
course, if the hours choice is truly non-stationary, as the cross-sectional
evidence in Table 2 might suggest, albeit weakly. If hours chosen also affect
expected duration, then a simultaneous equations bias will result from a
single equation estimate of the dependence of hours on duration.'-* In this
total hours equation, we include a duration term but it is not significantly
different from zero; similarly, various splines on unemployment length were
also jointly insignificant. Also, the results in Table 6 are essentially unaltered
when the duration regressor is excluded.
The principal change when we examine the various method-specific hours
equations in Tabie 6 is that the effect of the benefit level generally becomes
insignificantly different from zero, although its coefficient tends to stay
negative, as theory would predict. Other difference.s are less marked; age
seems important in the intensity of search via the Job Centre, the younger
subjects using it more, and being maie affects only search through Friends,
the Job Centre and Firms, all positively. Search through Advertisements is
somewhat different than the other methods in that, in addition to the local
unemployment rate, the presence of at least one other unemployed person in
the household has a significant and positive effect on hours chosen, raising the
time spent on this method by about 40 percent relative to its mean value.
in summary, it is notable that much of the variability in these hours choices
does not seem to be systematically related to the regressors employed.
Several of the variables that might have been thought important in fact seem
to play little if any role and the explanatory power of the equations overall is
rather low.

III. REPORTED OUTCOMES OF SEARCH

We now tum to two pieces of evidence concerning the outcomes of job
search. By necessity given the sample at hand, we focus on intermediate
outputs of the search process. To address how these interview s and job offers
relate to jobs accepted (and, thereafter, to duration on that job} requires a
different data set. Nonetheless, interviews and offers are necessary pre-
requisites for an eventual job acceptance and something can certainly be
learned from examining this first process.
We begin by looking at the relationship of job interviews to search inputs.
The data on interviews are grouped as for the hours data, so we can dis-
aggregate both the inputs and outputs and estimate the same type of equation
separately for each method and also for the aggregate. A key question that we

" A parallel is the case of non-slationaiy choices of the reserxation wage and the fact thai
this will bias single equation estimates of the dependence of the reservatiar wage choice upon
duration. Lancaster (i985) discusses one way around the probletn. in terms of identifying the
duration equation (but not the reservation wage equation), when the decline of reservation
*ages takes a particular parametric form.
286 BULLETIN

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 288 BULLETIN
address is the shape of the contacts-hours relationship. Diminishing returns
have often been found in past work, using only total hours and total contacts,
and it is of interest to see if this holds up for these more detailed observations.
Finally, we note that we only have data on the number of job interviews
attributable to each method for the whole jseriod since first unemployed,
whereas the time inputs data are only for the past 7 days. We assume
stationarity, compute 'contacts' as an average number of job interviews per
week for each method and then relate this average to the weekly hours
figures.''
The results of OLS estimation of these contacts equations are given in
Table 7."' In each case, the regressors "Hours' and '(Hours)-' refer to the time
input according to the method of search specified. The estimate for total
hours in the final column has the two search inputs jointly significant although
the quadratic component alone is very small (with a point estimate of
0.00005), These figures imply very weakly increasing returns, not far from
linearity; at the sample mean, for example, the marginal effect of one further
hour of search is 105,0 percent of the marginal effect of an addition hour
starting at zero hours. The effect of benefits is found to be (just) negative,
although it is not significantly different from zero at the 10 percent level and
the point estimate is small. Of the other regressors, the local unemployment
rate and age are both statistically significant, though the magnitude of the age
effect is not large.
Some of the disaggregated contacts equations display a similar pattern, but
others do not. The insignificant coefficient on benefits in the total hours
equation is repeated in each of the method-specific specifications, the five t-
statistics for this variable ranging in absolute value from 0.025 to 1.507. In
fact, only this last figure — for the Advertisements equation — is significant at
the 20 percent level. Age and the local unemployment rate are important in
several of the disaggregated equations, although not in all of them. Turning to
the estimates of the contacts-hours relationship, time spent on job search
through Friends does not seem important in determining interviews through
Friends, whereas, for all of the other methods, the null hypothesis of no joint
effect from hours and its square to weekly contacts is decisively rejected. The
equations for Advertisements, Friends and Other types of search are each
estimated as just concave in hotirs, though we cannot reject the simple
hypothesis of linearity. The equation for search via Firms is estimated to
display increasing retums, although again the quadratic effect is alone not
significantly different from zero. Most oddly, the equation for contacts via the
Job Centre — which is the largest single time input for this sample, on average
— has a negative leading term and a positive quadratic, these being both
individually significantly differentfi-omzero and also jointly so. This means a

"Absent the stationarity assumption, the horizon over which search inputs are recorded
wouW matter for an assessment of the retums to scale in the search technology,
' ^ We use the term 'contacts' to refer solely to applications that resulted in a job interview. We
do not have data available on aplications per se.
 JOB SEARCH METHODS, INTENSITY AND EFFECTS 289
U-shaped contacts-hours relationship, the minimum of this locus being
estimated at 3.63 hours. With a mean value overall of 1.92 hours for this type
of search (from Table 1), this puts a majority of people on the down-slope of
the curve. At a minimum, this raises some questions about aggregating these
types into one search equation. One defense of the result might be that search
via Job Centre is readily monitored by Unemployment Review Officers (to
check that claimants are 'genuinely seeking work'), so the mean of just under
two hours per week « a bindir^ constraint. But even this argument is suspect
since almost 20 percent of our sample reported no search in the past week,
with 37.7 percent reporting no search at a Job Centre. More likely, then, the
U-shaped estimated relation is actually the result of neglected heterogeneity
in the population, perhaps a consequence of wrongly assuming stationarity or
because of some other omitted variable. The result persists when duration is
added as a regressor, however, ailthough doing this does not allow for
simultaneous equation biases when the contacts-hours relationship is truly
duration-dependent.' ^
One objection to the results of Table 7, suggested by a referee, is that they
are spurious and reflect the endogeneity of agents' hours choices. If individ-
uals with higher than average contact arrival rates search for longer than
average hours, then this will generate a positive correlation that does not
reflect the structural technology of search. Of course, it is difficult to assess
the validity of this point directly, since we do not observe an individual's
contact arrival rate. An instrumental variables estimate would answer this
question, contingent on finding an appropriate set of instruments for agents'
hours decisions, but in general there seems no reason why any candidate
instrument that affects hours would not also have a direct influence upon
contacts. Thus, although the potential endogeneity of hours should be kept in
mind when considering Table 7, we have no means of quantifying its impor-
tance.
We have also investigated the extent of job offers rejected by the persons in
our sample. The vast majority, 603 out of 709, report no such offers received
and rejected, a strikingly high proportion given that the average elapsed
duration in our sample is over one year. Note at the outset that, unlike inter-
views, we do not have offers data categorized by search type. To investigate
what can be learned from these data, we have run several probit equations,
using a dummy dependent variable that takes the value of 1 if an offer has
been received and 0 otherwise.'** We report four of these estimates in Table 8.
As with the contacts equations, we note that, to the extent that hours are
correlated with (unobserved) offer arrival rates, this may bias the estimates
from a procedure that ignores this endogeneity.
''It might be thought possible to instrument duration in the contacts equation, but it seems
unlikely that any valid instrument can be found. Any variable that affects duration, given the
choice of hours (and hence contacts), will also reasonably affect that choice of hours, and no
plausible exclusion restriction seems available.
'"Tobit estimates produced nearly identical results since, of those who had received at least
one job offer, only a very small number had received two or more.
290 BULLETIN

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292 BULLETIN
TABLES
Rejection Probits"

Equation

Variable (S.I) (8.2)" (8.3) (8.4)'

Totat hours 0.002 -0.002

(0.009) (0.009)
Friends 0.075* 0.075*
(0.030) (0.030)
Job Centre -0.062* - 0.070**
(0.027) (0.027)
Firms -0.000 0.002
(0.032) (0.032)
Advertisements -0.005 -0.012
(0.021) (0.021)
Other 0.042 0.041
(0.045) (0.046)
Age 0.001 0.001 -0.001 -0.001
(0.006) (0.006) (0.006) (0.006)
Male -0.141 -0.149 -0.129 -0.136
(0.144) (0.148) (0.146) (0.149)
Married -0.152 -0.165 -0.123 -0.134
(0.144) (0.146) (0.146) (0.148)
Education -0.005 -0.001 -0.009 -0.004
(0.021) (0.021) (0.027) (0.026)
Technical 0.481** 0.480** 0.513** 0.509**
(0.134) (0.136) (0.137) (0.138)
Experience 0.013 0.015 0.008 0.010
(0.038) (0.038) (0.038) (0.039)
(Experience)ViOO -0.245 -0.250 -0.212 -0.216
(0.209) (0.210) (0.214) (0.214)
Local t; - 0.073** -0.078**
(0.021) (0.021)
[/Length 0.004 0.004 0.006 0.006
(0.004) (0.004) (0.004) (0.005)
Benefits 0.002 0.002 0.001 0.002
(0.003) (0.003) (0.003) (0.003)
Constant -1.062** -1.059** 0.038 0.114
(0.320) (0.318) (0.494) (0.490)
Log likelihood -288.09 -282.75 -282.07 -276.02
Average Ukeiihood 0.666 0.671 0.672 0.678

NOTES:
' Standard errors are given in parentheses. **, *, and t denote coefficients that are signifi-
cantly different from zero at the 1 percent, 5 percent, and 10 percent levels, respectively.
•• For the joint exclusion of the five search intensity variables, z^(5) = 10.26 {p = 0.068).
'• For the joint exclusion of thefivesearch intensity variables. x'(5) = 1! .41 (/? = 0.044).
 JOB SEARCH METHODS, INTENSITY AND EFFECTS 293
Neither of the two specifications involving aggregate search intensity,
equations (8.1) and (8.3), yields a statistically significant coefficient on Total
Hours,'' although both find that having a Technical qualification aids in
getting (and rejecting) offers. No significant effect is found fi-om the level of
benefits in either estimated equation. When the local unemployment rate is
added, in (8.3), it has a significantly negative coefficient, lowering the pro-
bability of receiving and rejecting an offer, ceteris paribus. However, there is
not much change in the other estimated coefficients between these two
models, except for the intercept. The disaggregated probit estimates, (8.2)
and (8.4), while similar to the preceding equations in some respects, par-
ticiilarly the insignificant coefficient on Benefits, strikingly show a positive
effect fi-om search via Friends and a negative effect fiom search at the Job
Centre, both effects being significantly different from zero. Overall, we can
reject the joint exclusion of the five intensity variables at the 10 percent level
in one case and at the 5 percent level in the other. We interpret the sig-
nificantly negative coefficient on Job Centre intensity as casting some doubt
on the view that these rejections data reveal an arrival rate for job offers.
Instead, these figures, and similar ones collected in other data sets, may be a
compound of this notional arrival rate and a rejection rate that depends on a
comparison of the wage offer with a reservation value.

IV. SUMMARY

Many empirical studies of unemployment, especially those motivated by job

search theory, have had recourse to comparatively little information. Often,
neither the reservation wage nor search intensity is observed and more
structure must be imposed to interpret the data; typically, this amounts to
assuming that intensity is constant and inferring the reservation wage by dis-
tributional assumptions given the duration of unemployment and the post-
unemployment acceptance wage. This paper, in contrast, presented detailed
evidence from a survey of the stock of the unemployed on reservation wages
and search intensity in a variety of search methods. Three principal conclu-
sions emerged.
First, we found no good evidence of increasing returns to search in this
sample. Rather, interpreting job contacts as the (intermediate) output of a
search process, the mode! with total hours of search was very close to linear
in intensity. When disaggregated according to search method, no significantly
increasing and convex relationships were found, although the results were
mixed. Further, we found no support for the inclusion of quadratic intensity
terms in the rejection probits, suggesting that we have an essentially linear
technology. We note that our failure to find any increasing retums parallels
recent macroeconomic models (e.g., Pissarides, 1986; Carruth and Oswald,
"We also investigated a quadratic spedfication in Hours, with neither the quadratic term
alone nor dte two terms together bdng significantly different from zero.
294 BULLETIN
1986) where no evidence for multiple natural rates of unemployment is
found in Britain.
Second, we have found no dramatic differences in the search intensity and
methods choices of various groups in the population, unlike the results of
Holzer (1986c) for the US. Even for the very long-term unemployed, the
pattern of these choices, and the related reservation wage, is not very dif-
ferent from that in this sample of the stock as a whole, although the extent to
which this arises from the sample design remains an open question. The
results suggest potential rejection of one hypothesis about differential labour
market outcomes, namely that they result primarily from systematically dif-
ferent choices by different categories of the unemployed. The extent to which
there is true unobserved heterogeneity or merely an employer bias against
hiring the longer-term unemployed remains, however, an open issue.
Third, our results lend some quite limited support to the predictions that
follow from a job search model. In modelling the choice of intensity, the sign
of the coefficient for the cost of search variable was generally that which this
theory would predict, but it was often poorly determined and insignificantly
different from zero.
McMaster University and University of British Columbia

Date of Receipt of Final Manuscript: February 1989

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