Research by Dr Christopher Rauh, an Assistant Professor at the Faculty of Economics, has found that while workers are overly optimistic about the probability of receiving a job offer conditional on any search, they perceive the marginal return to additional search hours as positive but comparably low.
“In other words, they are more hopeful than they should be about successfully gaining their next role each time they hunt for a job.” he says. “Meanwhile, they think there is not that much more to be gained from spending a lot more time hunting for a job, than there probably is.”
In the working paper Perceived Returns to Job Search, Abi Adams-Prassl, Teodora Boneva, Marta Golin, and Christopher Rauh examine workers’ search behavior and their perceptions of the returns to search, in the context of the post-pandemic change to the level and pattern of labor demand.
“In order to find a new job, one typically has to search for a job, and this takes time and effort,” he says. “Job seekers determine their search intensity to balance the expected benefits and costs of search – some may only hunt for a short amount of time while others spend much longer, hoping for better pay, conditions, or responsibilities.”
He adds the two main findings – of being overly optimistic, and not calculating the benefit of the time in hunting for a job, might be correlated. “Quite simply, their chances are worse than they appear to be of getting from application to interview and job offer. However, because applicants think their chances are better, they downplay how many applications they should be putting in, and therefore don’t think it is worth spending so much more time hunting for a job.”
The research finds job seekers receiving an offer update their perceived returns upwards, while without offers beliefs falls to regress towards the direction of the mean. “Effectively, once you get one job offer, you think you are worth more,” he says.
The research also finds little evidence that the novel aspects of the pandemic and subsequent downturn in the economy have fundamentally changed workers’ motivations for job search. “The main reasons why people are looking for a job is because an existing contract is coming to an end, or applicants think they just aren’t paid enough,” he says.
While’ Working from Home’ is seen to be a large benefit for many workers, who got into the habit at the start of the pandemic, the research has also found that workers’ ability to do their tasks from home is not a strong predictor of job search nor a significant motive for switching occupations.
The full paper is available at: https://www.janeway.econ.cam.ac.uk/working-paper-pdfs/jiwp2211.pdf
