UI Generosity and Job Acceptance: Effects of the 2020 CARES Act

To provide relief to the U.S. labor market following the onset of the COVID-19 pandemic, the CARES Act granted an extra $600 per week in UI benefit payments from late March through July 2020. This unprecedented increase in UI generosity raised concern that UI recipients would be largely unwilling to accept job offers, slowing the labor market recovery. Job acceptance decisions weigh the value of a job against remaining unemployed. A reservation level of benefit payments exists in this dynamic decision problem at which an individual is indifferent between accepting and refusing an offer. This reservation benefit is a simple statistic summarizing the decision problem conditional on the perceived state of the labor market and the weeks of Unemployment Insurance (UI) compensation remaining. Estimating the reservation benefit for a wide range of US workers suggests few would turn down an offer to return to work at the previous wage under the CARES Act expanded UI payments. Direct empirical analysis of labor force transitions using matched Current Population Survey (CPS) data, linked to annual earning records from the CPS income supplement to form UI replacement rates, shows moderate disincentive effects of $600 supplemental payments on job finding rates; this empirical framework also suggests small effects of the $300 weekly UI supplement available during 2021.

Nine Mechanisms of Job-Searching and Job-Finding Through Contacts Among Young Adults

Since Granovetter’s seminal works, the influence of personal networks on the labour market has attracted widespread attention. This article analyses the role played by contacts in the context of the labour trajectories of young people in Spain, for whom the use of personal networks represents one of the most important job-searching methods. Using narrative data extracted from a life-history grid and ego-network generator, the analysis brings to light nine mechanisms in which personal contacts intervene in job-searching and job-finding in a sample of 90 young people living in the Barcelona Metropolitan Area. The article emphasizes that contacts play primarily three roles in these processes as informers, employers, or influencers. This distinction offers a renewed framework for the study of networks in the labour market, further complementing the debate on the strength of ties. Using this framework allows me to create a map of the mechanisms that shed light on personal networks as tools with which to deal with labour insecurity and unemployment among young people, thus providing resources that to a large extent reaffirm the objective character of class differences. The article offers innovative insights into how social capital operates in the labour market and helps understand how youth precarity, which is widespread in Spain, is experienced in a relational way.

The Labor Market Impact of Immigration: Job Creation versus Job Competition

This paper studies the labor market effects of both documented and undocumented immigration in a search model featuring nonrandom hiring. As immigrants accept lower wages, they are preferably chosen by firms and therefore have higher job finding rates than natives, consistent with evidence found in US data. Immigration leads to the creation of additional jobs but also raises competition for natives. The dominant effect depends on the fall in wage costs, which is larger for undocumented immigration than it is for legal immigration. The model predicts a dominating job creation effect for the former, reducing natives’ unemployment rate, but not for the latter. (JEL E24, J15, J23, J31, J61, M51)

A job ladder model with stochastic employment opportunities

We set up a model with on‐the‐job search in which firms infrequently post vacancies for which workers occasionally apply. The model nests the standard job ladder and stock‐flow models as special cases, while remaining analytically tractable and easy to estimate from standard panel data sets. The parameters from a structurally estimated model on US data are significantly different from either the restrictions imposed by a stock‐flow or job ladder model. Imposing these restrictions significantly understates the search option associated with employment and are, unlike our model, inconsistent with recent survey evidence and declining job finding rates and starting wage with duration of unemployment, both of which are present in the data.

Job Seekers’ Perceptions and Employment Prospects: Heterogeneity, Duration Dependence, and Bias

This paper uses job seekers’ elicited beliefs about job finding to disentangle the sources of the decline in job-finding rates by duration of unemployment. We document that beliefs have strong predictive power for job finding, but are not revised downward when remaining unemployed and are subject to optimistic bias, especially for the long-term unemployed. Leveraging the predictive power of beliefs, we find substantial heterogeneity in job finding with the resulting dynamic selection explaining most of the observed negative duration dependence in job finding. Moreover, job seekers’ beliefs underreact to heterogeneity in job finding, distorting search behavior and increasing long-term unemployment. (JEL D83, E24, J22, J64, J65)