Insignificance of Pecuniary and Time Search Costs
Economic policy frequently assumes job application bottlenecks stem from monetary expenses (such as phone airtime or transport) or time delays (such as waiting on telephone lines), prompting interventions that subsidize search costs rather than addressing cognitive initiation hurdles.
Picture this
Imagine a library where checking out a book requires a one-minute phone call costing three cents. Offering a three-cent voucher or reducing phone wait time from four minutes to one minute does almost nothing to increase borrowing, because the true barrier is not the three cents or the three-minute wait, but deciding to initiate the call.
What the evidence says
Free callback salience increased applications by only 0.003 percentage points (1/100th of phone call treatment effect, p = 0.017). Offering text-based callback scheduling to eliminate wait time increased application probability by 0.059 percentage points, which is 1/4th the effect of proactive phone call initiation (p = 0.002).
- Who
- N = 7,004 jobseekers (54,135 matches) for callback request experiment; N = 4,423 jobseekers (13,126 matches) for free callback salience experiment in Lahore, Pakistan.
- How
- Multi-arm RCT comparing main phone call initiation against a free callback reminder treatment and a text-based callback request scheduling treatment that eliminated wait-time differentials.
What to do
Prioritize eliminating active step-initiation thresholds over monetary subsidies or minor time-saving tweaks when designing user assistance programs in low-resource environments.
From the source
"This callback request treatment has an effect one quarter of the size of the main phone call treatment... free callback reminder treatment has an effect one hundredth of the size... showing that time costs... can explain only a small share of the effect."
Why_Don’t_Jobseekers_Search_More_Barriers_and_Returns_to_Search.pdf