DP14414 Spatial Mismatches and Imperfect Information in the Job Search

Author(s): Abhijit Banerjee, Sandra Sequeira
Publication Date: February 2020
Date Revised: February 2020
Keyword(s): Biased Beliefs, job search, unemployment
Programme Areas: Labour Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14414

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 �ndings underscore the importance of supply-side information frictions and how they can lead to spatial and occupational mistargeting in the job search.