Spatial Mismatches and Imperfect Information in the Job Search

Abstract

Youth unemployment remains high throughout the developing world, at times coexisting with unmet demand for labor and high job turnover. This paper examines one possible explanation: young job seekers who live far from the city centres where jobs are located, over-estimate their employment prospects and underestimate actual commuting costs. Increasing access and exposure to the wider labor market leads job seekers to adjust beliefs and accept jobs closer to home. These findings underscore the importance of supply-side information frictions and how they can lead to spatial and occupational mistargeting in the job search.

Keywords: Biased Beliefs, job search, unemployment