Job Search Behavior among the Employed and Non-Employed

Using a unique new survey, we study the relationship between search effort and outcomes for employed and non-employed workers. Wefind that the employed fare better than the non-employed in job search: they receive more offers per application and are offered higher pay even after controlling for observable characteristics. We use an on-the-job search model with endogenous search effort and nd that unobserved heterogeneity explains less than a third of the residual wage offer differential. The model calibrated using various moments from our survey provides a good to the data and implies a reasonable low value of unemployment.