The Wage Effects of Voluntary Labor Mobility with and without Intervening Unemployment

Abstract

This study investigates how an unemployment spell between jobs affects a job-changer's new wages. One hypothesis holds that the search and mobility costs associated with unemployment between jobs are compensated for by increased wage gains resulting from more intensive job search; opposing hypotheses are that unemployed job changers are at a disadvantage because they have fewer job contacts than job changers who move directly from one job to another, or because they are unable to gain new skills or develop good work habits while unemployed. The results of this analysis of 1979–81 data from the National Longitudinal Survey of Young Men support the first hypothesis: an unemployment spell between jobs is associated with wage gains higher than those obtained when the job change was made with no intervening unemployment.