Suboptimally Low Search Effort
In classical search models, low application rates are assumed to reflect optimal individual choices where candidates balance search costs against diminishing marginal returns. If marginal search returns do not diminish and do not create negative market spillovers, private application levels are inefficiently low.
Picture this
Imagine a gold prospector who stops digging after one shovel stroke because getting up each day feels burdensome, even though every shovel stroke yields the exact same amount of gold and no other prospector is nearby to compete. The decision to stop digging represents a behavioral failure rather than an optimal economic trade-off.
What the evidence says
Reducing initiation costs increased application volume 7-fold and interview volume 7-fold without reducing interview yields per application (p = 0.647) or creating crowd-out on control applicants (p = 0.589), demonstrating that baseline job search effort is suboptimally low due to initiation frictions.
- Who
- N = 9,838 jobseekers (1,116,952 matches) and 1,340 employer vacancies in Lahore, Pakistan.
- How
- Policy inference synthesizing a 600% application increase from default initiation, constant 2SLS interview yields (5.87% vs 6.29%), and near-zero spillover coefficients (p = 0.589 and p = 0.511).
What to do
Implement active platform outreach and default opt-in application policies across public employment services to correct systematic under-searching without fear of depressing match returns.
From the source
"The finding of constant returns to marginal applications, combined with limited spillovers onto other jobseekers, raises the possibility of suboptimally low search effort."
Why_Don’t_Jobseekers_Search_More_Barriers_and_Returns_to_Search.pdf