Search Capital

By Carlos Carrillo-Tudela and Eric Smith

http://d.repec.org/n?u=RePEc:iza:izadps:dp6366&r=dge

We construct a simple equilibrium search model in which workers accumulate information about previously met employment contacts. We term the latter search capital. Here search capital (partially) insures workers against adverse shocks. The model provides a theory of job-to-job transitions that are associated with voluntary or involuntary mobility and with wage rises or wage cuts. It also shows why low wage and younger workers are associated with a higher probability of becoming unemployed.

Nice paper that takes into account an important aspect of the network aspect of job search. I guess the next step is to include in this capital “acquaintances,” that is, former colleagues who can recommend you.