• Open Access

Employed and Unemployed Job Seekers and the Business Cycle


  • We thank the Editor and two anonymous Referees for useful comments on earlier versions of this article. We also thank participants at the Micro-Social Change Workshop, University of Essex (April 2010), European Society of Population Economics Conference (Essen, Germany, June 2010), Joint European Association of Labour Economists/Society Of Labor Economists Conference (London, June 2010), Work and Pensions Employment Group Conference (Bristol, July 2010) and to the Search and Matching Workshop, University of Essex (March 2011) for helpful comments. This forms part of the project ‘Job search in the UK 1990–2006’, funded by the Leverhulme Trust Grant no. F/00 213/O; it is also part of a programme of research funded by the Economic and Social Research Council through their grant to the Research Centre on Micro-social Change at ISER. The support provided by the ESRC and the University of Essex is gratefully acknowledged. LFS and BHPS data are available from the Data Archive at the University of Essex (http://www.data/archive.ac.uk).


The job search literature suggests that on-the-job search reduces the probability of un employed people finding jobs. However, there is little evidence that employed and unemployed job seekers are similar or apply for the same jobs. We compare employed and unemployed job seekers in their individual characteristics, preferences over working hours, job-search strategies and employment histories, and identify how differences vary over the business cycle. We find systematic differences which persist over the business cycle. Our results are consistent with a segmented labour market in which employed and unemployed job seekers are unlikely to directly compete with each other for jobs.