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Professors: Stocks, housing prices impact hunt for jobs

Faculty in the Love School of Business also identify links between past wages, and even marital status, when it comes to the unemployed looking for work.

Steve DeLoach (left) and Mark Kurt in the Department of Economics


Unemployed workers search harder for new jobs when the real estate market falls, but an even bigger motivation for landing a new position comes from drops in the stock market, according to preliminary data collected by Elon University economists.

In their working paper “Discouraging Workers: Estimating the Impacts of Macroeconomic Shocks on the Search Intensity of the Unemployed,” faculty members Steve DeLoach and Mark Kurt in the Department of Economics examine the factors that influence job search intensity among unemployed Americans.

Their findings come as current economic indicators suggest the United States may be headed into a double dip recession that would affect the way the unemployed search for work. “Policy makers will want to think about how housing prices impact more than just the buying and selling of homes, or how the stock market impacts more than just income,” Kurt said. “They have an impact on the labor market in other ways we haven’t thought about.”

Among the Elon researchers’ preliminary data:

1.) A 5 percent decrease in the S&P 500 stock index increases the weekly amount of time unemployed workers look for a job by four minutes. “While this appears small, recall that the stock market fell by about 50 percent in the first half of 2009,” the professors write.

2.) Declines in housing prices also have an effect on the search for work, but is weaker than that of the stock market. The researchers theorize that the “wealth effect” – how much someone spends relative to how much they are worth through salaries and other investments – is easier to measure by following the daily fluctuations of the market as opposed to real estate, where prices move slowly over time and aren’t as immediately apparent to workers.

3.) DeLoach and Kurt found that, “surprisingly,” search intensity is not affected much by unemployment benefits. They also discovered that news coverage of layoffs at local companies dampen efforts of the unemployed to find work as the newly jobless are now competing for the same limited number of current openings.

4.) Expected wages from a new job greatly impact the job hunt. When it comes to search intensity, workers laid off from high-paying jobs spend significantly more time looking for new work that do workers who once held low-paying jobs. “Your white collar worker has a huge incentive to work,” DeLoach said.

5.) Married men spend 40 percent less energy than unmarried men or all women in searching for jobs. The Elon professors point to recent literature that attributes that lack of intensity to spending more time helping with household chores.

“Our results offer a nice explanation for why there was a surge in search intensity in 2008 at the beginning of the recession, and then a sudden drop afterward in 2009,” DeLoach said. “It really comes down to that wealth effect. The stock market plunged initially, and that’s what led to people really searching hard. They had nothing to fall back on. Some people lost 50 percent of their wealth.”

The Elon professors used data from the American Time Use Survey 2003-2009 administered by the Bureau of Labor Statistics. They also relied on data from the BLS related to macroeconomic shocks, as well as figures from Standard and Poor’s.

“When people search with more intensity, they’re more likely to find a job, all else equal,” Kurt said. “As people search more, high intensity searchers are filling out more applications, and they’re getting more job offers.”

DeLoach earned his doctorate in economics from Michigan State University and joined the Elon University faculty in 1996. He frequently serves as a mentor to undergraduate researchers and won the Martha and Spencer Love School of Business Excellence in Scholarship Award in 2009.

He served as chair of the Department of Economics from 2005-2009. In addition to his many journal articles and conference presentations in recent years, he has also served as adviser to Issues in Political Economy, an undergraduate economics research journal co-published by Elon University and the University of Mary Washington.

Kurt joined the Elon faculty in 2008 after receiving his doctorate in economics from the University of Iowa. His research interests in labor and health economics have led to several conference presentations and media interviews, and he has mentored seven students in their senior or Honors thesis work during his time on campus.

Eric Townsend,
9/8/2011 2:06 PM