Tuesday, October 11, 2011

Has the Internet reduced job market frictions?

When we teach about how the Internet has improved the efficiency of the economy, one typical example we give is about job search: the Internet makes vacancy postings instantly available and searchable. And job applicants can send CVs with little cost and time, or even have them available in CV banks. The problem is that Peter Kuhn and Mikal Skuderud have proven that this is not true. But that was with data from 1998-2000. What about today?

Peter Kuhn and Hani Mansour replicate the exercise, but with data from 2008-2009. They concentrate on young job seekers and find that those who use the Internet for job search reduce their unemployment duration by 25%, which is considerable (and makes us teachers prescient). And this is not just because of a particular group or specification. Running the same regressions in the earlier sample provides no noticeable effect. This means that somehow people have learned to use the Internet effectively, which is consistent with the success of the Monster Board or Craiglist and the proportion of those using the Internet for job search.

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