Academic journal article Economic Perspectives

What Does Online Job Search Tell Us about the Labor Market?

Academic journal article Economic Perspectives

What Does Online Job Search Tell Us about the Labor Market?

Article excerpt

Introduction and summary

Online job search (OJS) has become a pervasive part of job-finding and hiring in the U.S. labor market.

Its use by both job seekers and employers has exploded in a fairly short period. There are now a variety of well-known, high-traffic websites devoted to job search. Furthermore, online job search has become the preferred method of search for nearly all types of job seekers. Recent research, as well as new findings that we present in this article, suggests that online job search is the new norm for how job seekers find work and how employers hire workers.

The microdata on online job search enable new and exciting avenues for labor research that were not possible with existing survey data. In particular, online job search data often allow researchers to follow job seekers' daily search behavior throughout their search spells. This provides researchers with the opportunity to study the entire search process and factors that influence it. This process is an important area of modern labor and macroeconomics research. Specifically, contemporary models of labor market search characterize job search and hiring through the use of a matching function--which is often "black box," or opaque, in nature. Online job search data provide an opportunity for researchers to help open up the black box.

Until even a few years ago, online job search had not been studied very much in economic research. Yet there were some notable exceptions. One key early study on OJS was by Kuhn and Skuterud (2004). Their work found that in 2000, OJS was used by about one-quarter of unemployed job seekers and was no more effective than traditional job search methods in helping them find work. More-recent research, however, suggests that both the use and effectiveness of OJS have changed dramatically since the turn of the twenty-first century. Kuhn and Mansour (2014) find that the unemployed in 2008-09 were three times more likely to use OJS than about ten years earlier and that using OJS significantly increased job seekers' chances of finding work relative to using traditional methods only. Using 2011 data, we confirm Kuhn and Mansour's (2014) findings regarding the prevalence and effectiveness of OJS.

In this article, we discuss the evolution of online job search and how it has become the principal method for finding employment and hiring workers. We then proceed to discuss the typical content of the OJS data and the advantages and disadvantages of using these data for research. We also compare the aggregate labor market patterns from OJS data with the aggregate patterns from published U.S. statistics. Through that comparison, we show that the OJS data generally capture the aggregate patterns of the U.S. labor market. Finally, we summarize some recent research that uses OJS data--such as studies examining questions regarding search effort and duration of search, the scope of search, search effort and unemployment insurance (UI) benefit extensions, and the incidence of wage posting online. We also briefly review recent studies that use the OJS market for experimental research on job search and hiring. By going over the recent literature, we hope to show how OJS data can provide exciting avenues for future research on the labor market.

The evolution of online job search

Using the Internet to find work is a fairly new phenomenon. Prior to the rise of OJS, job seekers had to rely on newspaper help-wanted ads, referrals, offline networking, word-of-mouth leads on jobs, and direct contact with employers to find out about new job opportunities. Kuhn and Skuterud (2004) were the first to look at how OJS compared with these traditional methods of job search. They examined the job-finding prospects of the unemployed using the 1998 and 2000 Computer and Internet Use Supplements to the Current Population Survey (CPS). Internet use in general, let alone for job search, was not yet common in 2000. …

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