Job search is a central feature of labor markets, and barriers to job search can have important effects on employment, earnings, and productivity. Economists have shown that factors like financial search costs and incomplete information are important barriers to search. This suggests that environments offering cheap, fast, information-rich job search might improve search outcomes. Online search and matching platforms offer exactly these features, but job application rates remain low even on these platforms.
Psychological costs of starting job applications
A recent IZA discussion paper by Kate Vyborny, Robert Garlick, Nivedhitha Subramanian, and Erica Field explores how psychological costs of starting job applications might act as a barrier to high-return search. Using a novel job search platform in Pakistan called “Job Talash,” the authors recruited platform users through a representative survey of over 50,000 households in Lahore. These jobseekers varied widely in baseline employment and job search status, ranging from employed and searching to non-employed and non-searching.
Each month, jobseekers on the platform receive a text message about new job vacancies that match their qualifications and preferences. The message invites them to phone the platform’s call center to apply for these matched jobs. Some jobseekers are randomly assigned to also receive a phone call after their text message. The phone call repeats the information from the text message and invites them to apply immediately, without providing any additional information or encouragement. Thus, the treatment only changes how jobseekers start job applications, moving them from an active role to a passive role.
Insights into job application behavior and outcomes
The phone call treatment increases the job application rate by a dramatic 600%. Control group jobseekers apply to only 0.2% of all vacancies that match their qualifications and preferences, while treatment group jobseekers apply to a much higher 1.5% of all matched vacancies. It’s natural that jobseekers don’t apply to many matched vacancies, as the platform deliberately matches them with numerous jobs based on broad criteria.
Surprisingly, the return to these additional applications remains roughly constant rather than decreasing. Roughly 6% of applications lead to interview invitations in both the control and treatment groups, even though treated jobseekers send many more applications. The same pattern holds for interview invitations to jobs with desirable features like higher salaries, benefits, and shorter commutes. Unfortunately, the platform doesn’t track whether these interview invitations lead to job offers.
Explaining low application rates
Roughly constant returns to job search raise a question: why don’t untreated jobseekers apply to more jobs, especially because applying on the platform is cheap and fast? The authors argue that psychological costs of starting applications are the most likely explanation. Existing research suggests multiple types of psychological costs that might be reduced by treatment. Attention costs may decrease because treated jobseekers don’t need to focus on text messages or set time aside to decide whether to apply. The phone call may prevent procrastination and missed application deadlines. And the phone call allows jobseekers to apply immediately, with less time to anticipate and fear rejection.
Many other possible explanations for these results can be ruled out. Monetary and time costs are unlikely explanations for why untreated jobseekers don’t send more applications: applying on Job Talash is already cheap and fast, and other treatments designed to reduce monetary and time costs don’t increase applications much. The phone call treatment doesn’t change other ways jobseekers use the platform: treated jobseekers don’t apply to different types of jobs, update their CVs more often, or hold different beliefs about the value of applying on the platform.
Implications for job search platforms and policies
The findings in this study show that simple changes to job search processes can increase search and improve search outcomes. This has important implications for designing job search policies and platforms. Most obviously, job search platforms can simplify the process of starting job applications or making decisions. More broadly, the results highlight the importance of considering the psychology of job search, especially when combined with existing research showing that simple plans and reminders can increase job search.