Armando Miano (Harvard University)

 Search Costs, Outside Options, and On-the-Job Search

Abstract. I study how beliefs about search costs, returns to search effort, and outside options relate to the job mobility decisions of employed workers. I design an online survey and administer it to a representative sample of wage and salaried workers in the US. In the survey, I directly measure employed workers’ perceptions of search costs and the perceived returns to their job search effort. I also elicit workers’ beliefs about their opportunities outside of their current job and measure their knowledge of the wage distribution in their occupation. I document significant heterogeneity in expectations across demographic groups. Women expect higher costs and lower returns to effort. I study how expectations relate to on-the-job search behavior at the extensive and intensive margin.  I find that beliefs about outside options and returns to effort are the strongest predictor of job search intentions. Respondents who expect to spend more time looking for job openings have a lower propensity to search, consistent with the relevance of information frictions. Using two information experiments, I show that accurate information about the median wage does not shift search intentions, while positive information on the recent search experience of similar workers is more effective for groups that are more worried about search costs.