Discussion Paper Details

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Title: Labour Market Prospects, Search Intensity and Transition from College to Work

Author(s): Peter Berkhout, Bas van der Klaauw and Aico van Vuuren

Publication Date: August 2004

Keyword(s): business cycle, return-to-work experience and structural estimation

Programme Area(s): Labour Economics

Abstract: In this Paper, we develop a structural model for the job search behaviour of students entering the labour market. The model includes endogenous search effort and on-the-job searches. Since students usually do not start a regular job before graduation but start job searches earlier, our model is non-stationary even if all structural parameters are constant. The model explains the common finding that a substantial share of individuals start working immediately upon graduation. We estimate the model using a unique data set of individuals who completed undergraduate education in the Netherlands between 1995 and 2001. Our estimation results show that a 1% decrease in unemployment rate increases wage offers by 3%, that there are substantial returns to work experience and that individuals devote less effort to job search than optimal. Employment rates at graduation could be increased from 40% to 65% if all individuals start job searches 6 month prior to graduation.

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Bibliographic Reference

Berkhout, P, van der Klaauw, B and van Vuuren, A. 2004. 'Labour Market Prospects, Search Intensity and Transition from College to Work'. London, Centre for Economic Policy Research.