An Empirical Analysis of On-The-Job Search and Job-To-Job Transitions

29 Pages Posted: 5 Nov 2010

See all articles by Shigeru Fujita

Shigeru Fujita

Federal Reserve Bank of Philadelphia

Date Written: October 2010

Abstract

This paper provides a set of simple, yet overlooked, facts regarding on-the-job search and job-to-job transitions using the UK Labour Force Survey (LFS). The LFS is unique in that it asks employed workers whether they search on the job and, if so, why. The author finds that workers search on the job for very different reasons, which lead to different outcomes in both mobility and wage growth. A nontrivial fraction of workers engage in on-the-job search due to a fear of losing their job. This group mimics many known features of unemployed workers, such as wage losses upon finding a job. Workers also search on the job because they are unsatisfied. This group is roughly equally split into those who are unsatisfied with pay and those who are unsatisfied with other aspects of their job. Distinguishing these two groups allows the author to highlight the importance of the nonpecuniary value of a job. He further shows that the evidence that firms make a counteroffer in response to a worker's outside offer is scarce and that wage outcomes at the time of job-to-job transitions are closely linked to the worker's outside option. The evidence in this paper contributes not only to deepening our understanding of labor reallocation, but it also suggests the fruitful directions of future research in the labor search literature.

Keywords: On-the-job search, job-to-job transitions

JEL Classification: J31, J62, J64

Suggested Citation

Fujita, Shigeru, An Empirical Analysis of On-The-Job Search and Job-To-Job Transitions (October 2010). FRB of Philadelphia Working Paper No. 10-34, Available at SSRN: https://ssrn.com/abstract=1702440 or http://dx.doi.org/10.2139/ssrn.1702440

Shigeru Fujita (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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