Monday, December 8, 2008

What are unemployed people doing with their time?

When we model unemployment, we like to think that unemployed workers enjoy more leisure, but still spend a significant time searching for jobs. This modeling choice has important implications as it means that it is normal for the start of an unemployment spell to lead to lower consumption, as market consumption is substituted for home consumption and leisure. Do these choices by theorists make sense?

This is one question that Alan Krueger and Andreas Mueller can answer in a pair of papers that use the American Time Use Survey (which still needs saving) and other surveys. Overall, unemployed people behave in expected ways: they sleep more, they spend more time in home production, including care of children, and have more leisure, in particular TV watching. They also spend more time shopping and, of course, looking for a job.

This is where it becomes interesting. On a weekday, an American spends 40 minutes looking for a job. While this is surprisingly low, consider that Scandinavians bring it down to 5 minutes. These numbers hide considerable within country variation as, for example, only about 20% unemployed Americans actually spend time looking for a job. For those that actively search, the time spent is determined by the "urgency" of the job search: being married or female leads to less job search time. Educated people search more. But again, this is conditional on searching at all.

Unemployment insurance benefits do not seem to explain the cross-country variation in time spent searching, except maybe the change in benefits as the unemployment spell last over six months. However, in the US, cross-state variation can be explained by UI benefits. And for those eligible, search time increases as the end of eligibility approaches.

All in all, it looks like unemployed workers are behaving as theorists would expect. Except that the length of time spent looking for a job is an order of magnitude shorter that what is generally assumed.

5 comments:

VIlfredo said...

I could not find anything in the papers that would discuss how the requirement from unemployment insurance that you have to actively look for a job has an impact on the actual search time. That would be very interesting.

Anonymous said...

When I first became unemployed at the end of August '08 I spent 5 to 8 hours a day, every day, furiously creating accounts at every job search site I came across, creating multiple versions of my resume, crafting cover letters, and laboriously filling out online job applications. I did not file for unemployment but lived on savings because I had no idea how difficult it would be to find a job, despite my MA and having finished all of the Ph.D courses required of my area of study (no doctorate yet- dropped out because I am unemployed).

I exhausted myself and gained probably 15 lbs in three months of sitting in front of the computer applying for jobs and eating my room mate's groceries (had to break my lease and move in with a friend since I could no longer pay the rent). Ninety-nine percent of the employers I've applied to never bother to verify that they received my application, let alone call me for an interview. I became more and more despondent as my funds ran out, and by early December had run out of money. I finally filed for unemployment.

Receiving unemployment funds makes me feel less frantic. I sleep better at night, and now that I can buy my own groceries I am eating more healthfully. I sleep more, and have begun to spend more time contemplating the kind of life I want to live and making changes in order to achieve this goal, regardless of the job I find.

I now spend only a couple of hours 5 days a week looking for work. I spend more time networking online with people who have interests or careers in my fields of knowledge and/or interest. I also spend time teaching myself the basic skills involved in new careers I might have to try to break into.

So, the bottom line is that without unemployment I spent much more time looking for work but was becoming an emotional and physical wreck. With unemployment I am healthier and a bit more relaxed, and have become more creative in my job search now that I can breathe a bit.

firefly said...

I never collected unemployment, but I hunted online for a month and got few responses, then I just started going out, resume in hand, and saying "here I am, ready to work." I got a job (not in my field of expertise, and not making the money I want)... it's a decent full-time job with insurance and such... so now I'm looking for a better job for about 5 hours every week. The problem boils down to two things... the perception of time gets skewed pretty heavily, it's easier than people realize to wake up one morning and realize its been months since the last day of work... and the other thing is that some people are just predisposed towards working... there are some people who just get very upset and cabin-feverish and go out and will settle for a job that is not the best productivity match simply because they are so overwhelmed by "leisure" time.

Aparna said...

I am never unemployed, because I am working on our family business. so I don't know what people doing with their time when they are unemployed.

Anonymous said...

I am unemployed more than six months. I feel very sad also I search for job everyday. But do not see much job matching my qualification and experience. I am ready to take any office job. But with my experience nobody cares to hire me.Becoming very frustrated day by day. I need job hate to stay with unemployment benifit. I had government job and extremely upset after I laid off.