Improving job search through better information: A low-cost approach

This article by Philipp Kircher at the European University Institute and University of Edinburgh, outlines how the internet can be used to provide information to jobs seekers in a way that changes how they seek work

Getting unemployed people into work is a major policy concern. Among the multiple ways in which one might want to achieve this, the provision of better information about how to look for jobs has undergone a technological revolution. It is tie to revisit how we use this channel to help job seekers to find jobs.

Undoubtedly, there are other means by which to improve the situation of unemployed people. Ideally one would like to increase the availability of jobs. That turns out to be extremely hard to achieve. Therefore, policy attention has been directed towards the search behaviour of the unemployed with an aim to fill the existing vacancies more quickly.

Three pillars underlie this:

(1) Skills of job seekers might not be commensurate to the requirement of the available jobs, so retraining becomes a popular though costly policy;

(2) Job seekers might not search enough, so monitoring their search behaviour and imposing sanctions is another policy option, and;

(3) Job seekers might lack knowledge which jobs to search for, so professional advice could allow them to succeed more quickly.

Of these, the first 2 have gained substantial research and public policy scrutiny. One might argue that the third received much less. Here we outline why it is a good time to change this and highlight recent research that aims to effectively provide advice online at low cost.

Providing advice is an attractive policy option because it is a “friendly” option. Job seekers can choose to adopt it if they deem it helpful. This contrasts with the more intrusive measures (1) and (2) above that usually are imposed on unemployment benefit recipients. Providing advice is already part of the tool-kit of most unemployment agencies and most studies show some effectiveness.

One drawback is that employing professional advisors has substantial costs, usually ranging from many hundred to several thousand Euros per individual. Finding positive effects that exceed the costs of the intervention has proven to be difficult. New technologies provide an alternative – the internet is revolutionary precisely in providing information at low cost, especially if this is designed well.

Which information would be useful?

Recent research documents the co­existence of occupations where many people search for jobs, but few jobs are offered and occupations with the opposite. More importantly, this occurrence has increased substantially since the last recession. One contributor could be that job seekers simply do not know which occupations are currently attractive and whether their skills might be sufficient to secure a job there. A natural implication is to provide them with this type of information. Such information must be easy enough that people can understand and use it and cheap enough, that it does not stretch the already strained public finances.

In a recent research project on “Providing Advice to Job Seekers at Low Cost: An Experimental Study on On-Line Advice” by Michele Belot, Philipp Kircher and Paul Mueller (CEPR working paper DP109967), we attempt exactly that. We design an Internet platform that incorporates relevant information right into the job search process. We ask individuals which occupation they are looking for. We then show them the most popular occupations that those who are already working there choose subsequently. Given that those other workers were able to make an occupational move, it indicates that skills might be transferable and jobs in these new occupations are available.

We also show occupations that are close in the skill spectrum (without concern for how many jobs there are) and provide maps that illustrate how “tight” the market is. All this is intended to allow individuals an informed choice about alternative occupations. They can choose which ones they retain and if they then hit the “search” button they obtain actual jobs not only in their originally desired occupation but also in all the related ones.

We trialled this with 300 job seekers in Edinburgh. They were asked to search for real jobs that we were kindly allowed to download from Universal Jobmatch and that cover over 90% of the official vacancy count. All job seekers started with a standard interface where individuals can search by keywords or drop-down occupational menu, with the obvious limitation that they themselves must come up with the relevant keywords or occupations. After three weeks we introduce half of them to the new interface that makes recommendations, though they retain the option to continue as before. We analysed how their job search behaviour and success changes relative to the group that continues with the standard search interface.

We find that the advice leads job seekers to consider jobs from a more diverse set of occupations and increases job interviews. We find this robust especially for those who searched over a narrow set of occupations in the first 3 weeks (prior to our intervention) and who were somewhat longer unemployed (above 80 days). The increase in interviews is substantial: of the order of 40% and higher.

This is not without caveats which need to be resolved in larger studies: amongst them, we have no evidence that they obtain more jobs (but can also not rule out that job finding goes up less than the number of interviews). We aim to resolve this in a larger study within the MacCaLM project at the University of Edinburgh. We also cannot rule out that additional interviews come at the cost of reduced interviews for others who are not in the study.

While we clearly need more evidence, the improvements in interviews suggest a promising outlook – the costs of providing such information to each additional job seeker are minimal and versions of such an intervention could be rolled out at large scale without tying up large amounts of public money. If it turns out to particularly benefit certain individuals such as narrow searchers with longer unemployment duration, it could be targeted to them directly by the job search website. Given that many governments have public job search websites, this suggests a promising and low-cost avenue to improve the labour market.

Please note: this a commercial profile

Philipp Kircher

Professor of Economics

European University Institute and

University of Edinburgh

Tel: +39 055 4685 42

philipp.kircher@eui.eu

http://homepages.econ.ed.ac.uk/~pkircher/