Job Search Autonomy

Title: Job Search Autonomy

Abstract: Matching unemployed workers to jobs is an important policy agenda. Search effort being a key input to job matching, unemployment policy commonly imposes restrictions regarding the amount and direction of job seekers' effort provision. We study the labor market effects of alleviating these restrictions by means of a large-scale policy change in the Swiss canton Bern. Over the course of the policy change, the Public Employment Service increased the autonomy of job seekers by reducing job search requirements, abolishing mandatory vacancy referrals, and referring to job seekers as customers. Using detailed administrative data, we find that job search lowered and became more narrow after the policy change. This came at the cost of an increased average unemployment duration, but at the benefit of increased re-employment earnings. Moreover, results show that the local scope for job search externalities is decisive for the average effect of changes in search behavior.