A MODEL OF COMPETITION BETWEEN UNEMPLOYED AND EMPLOYED JOB SEARCHERS - AN APPLICATION TO THE UNEMPLOYMENT OUTFLOW RATE IN BRITAIN

The aim of this paper is to highlight the role played by employed job searchers, and the central importance of the endogeneity of employed job search in the UK. Incorporating this changes the dynamics of the labour market in a number of interesting ways; here we focus on the implications for the flow out of unemployment. If the employed can search for jobs, then the increase in offers tempts more of them to search, thus creating more competition for the unemployed job searchers. The unemployed are partially crowded out of the new jobs, and the outflow rate increases by much less than one-for-one. The remainder of this introduction briefly describes the matching model and establishes why an alternative is required. -from Author