I recently attended a conference where Chi Man Yip, a doctoral student at University of Calgary, presented a paper called Search Relativity, which he has coauthored with Ying Tung Chan of Southwestern University of Finance and Economics. The paper is not yet published and is still in progress, but I found its premise and conclusions quite interesting.
The aim of the paper is to try to understand relative unemployment rates of more educated individuals to less educated. Historical data show that the unemployment rate among society’s most educated always hovers around one half the overall unemployment rate. Paradoxically, the overall unemployment rate is not correlated with the fraction of society who are highly educated. The paper takes a theoretical approach to solving this paradox.
Among their interesting results is the one from which the paper derives its name: Search Relativity. The authors present a simplified model showing that the primary characteristic that improves one’s chances of finding a job is search intensity relative to others in the labor market. In other words, if you look harder than anyone else, you will find a job faster than anyone else.
Their theory suggests that education, experience, etc., do not, in themselves, increase one’s speed of finding a job. More educated individuals have lower unemployment rates simply because they devote more time and energy to looking for work.
This is potentially a really important finding for policymakers and social workers. That advice our parents gave us is now supported by economic theory — if you are having trouble finding a job, look harder!
So, for those of us who are lucky enough to be employed, our suspicions are confirmed. It’s not luck at all. We have jobs because we worked hard to find them, and others do not have jobs because they just didn’t work as hard as we did. Right? That’s what this new theory from Yip and Chan says.
But, wait. Not so fast.
After Chi Man had presented, while most in the room chatted excitedly about this result, one young woman raised an important objection to that line of thinking. She pointed out that even if Yip and Chan’s theory is correct and search intensity is the only important factor in successful job hunting, the solution to unemployment is not as simple as just telling the jobless to look harder. One’s ability to search intensely for work is often affected by things beyond the individual’s control.
I am not too far removed from my own job search to remember the resources it required: access to a computer for building my resume and for submitting it to online job listings, transportation to job interviews, nice clothes for interviews and the ability to pick up and move to a new city for the job I eventually got. It does not make sense to tell someone without access to these things to look harder for a job. And it does not make sense to expect someone without a job to be able to gain access to these things.
This is the issue faced by many of our unemployed. They face constraints making it impossible to look harder.
So, yes, Yip and Chan’s theory does have important implications for policymakers and social workers, but their answer is not simply in telling folks to try harder. The policy implication is that in order to alleviate joblessness, we need to help provide the tools necessary to try harder. Only then can we assume individual motivation is a primary determinant of who gets the jobs.
Reg Murphy Center