Job Hunting: A Costly Quest
Searching for a job requires time, which unemployed individuals typically have to spare, and monetary resources, which they arguably lack. To study the implications of pecuniary search costs, which mostly affect search decisions of liquidity-constrained unemployed individuals, we embed such costs in a heterogeneous‑agent search-and-matching model with incomplete markets and endogenous job search decisions. To quantitatively discipline the model, we use administrative data from random audits of unemployed individuals claiming Unemployment Insurance benefits. We use the model to study the aggregate effects of different policies aimed at increasing the fraction of unemployed who are actively engaged in job search.