Search theory suggests that improving the information available to workers about existing

job openings should reduce frictional unemployment. But the economics literature has
produced mixed endings on the role of internet job search engines like Monster.com on job
search times and unemployment rates, as discussed in the Digital Journal op-ed linked
below (and provided on Blackboard). Do you think internet job search sites have or will
have a long-term effect on unemployment and the ease with which people find jobs?

Over the last few years advancement in technology has led to revolutions in every fields of life.
The use of the internet has become a part of our daily lives and in the recent years trends have
emerged of using the internet as a tool to search for jobs. This means of searching for jobs has
become very popular over the last few years. There are companies which are providing this
facility of online search engines for jobs, take the example of Monster.com, that began to operate
in the mid 1990s, and is one of the leading Internet firms in the field of listing employment,
reportedly having approximately over 1 million postings. Such search engines have directly
reduced the frictional unemployment by making the process of job search far more efficient and
has therefore shortened the search period. Although it may have many positive impacts but on
the other hand it is very difficult to calculate the reduction in unemployment through this
process. The internet may have been successful in lowering the rate of unemployment by making
it easier for those who are already employed to look for newer jobs, thus increasing the
probability that people will easily be able to move from one job to another without experiencing
the phase of unemployment. Most importantly the internet provides a through job prescription
that gives the worker a complete job description and a detailed account of the employer, which
may in return increase the probability of an appropriate match but at the same time eliminates the
probability of quit or performance based dismissal.

Frictional unemployment results because it takes time for workers to search for new jobs that
best suite their tastes and skills. Frictional unemployment is the result of the change in demand
for labour between different firms. For example when the consumers decide that they prefer
Compaq rather than Dell computers, Compaq increases employment and at the same time Dell
lays off employees. The worker that used to work for Dell must now search for a new job, and
Compaq must decide whom to employ for various job openings. The result of this transition is a
period of unemployment. Some economists believe that some frictional employment may be
inevitable due to the faster spread of information about job openings and work availability. The
internet has now facilitated job search and thus as a result reduced unemployment.

In the late 1990s as the use of the Internet became more and more popular economists and
researchers started to consider accessing the effect of this new trend up on the labour market. In
2001 Autor defined three areas in which the internet would most probably affect the Labour
market: firstly the process as to how employers and jobseekers look for one another; secondly
how the labour demand is shaped by the local market; and finally the delivery of the labour
services. The primary effect of the online job search engines is to reduce the cost of information
being provided. Comparatively to other modes of searching for jobs, such as newspapers, the
internet is far easier to search. As a result there is a decline in the rate of unemployment, shorter
unemployment spells, and higher productivity rate.
Although the cost of advertisement is reduced but the negative aspect is that the easy access to
credentials, potential employers and job descriptions might result in the selection of adverse job
applicants. In 2004, the study conducted by Kuhn and skuterud highlighted this problem of
adverse selection based on unobservable facts. Their findings concluded that compared to the
non internet users, internet jobseekers are probably going to be more educated and more
experienced with lower unemployment rate. The fact of racial discrimination also comes forward
because of the inequalities associated with the access to the internet rather than the preference of
different strategies for job searching.

This increase in the trend of searching for jobs through the internet has had far reaching and
broadening implications in terms of the labour market. (David H. Autor). A study conducted at
the University of Colorado concludes that using the internet to find job cloud prove to be a
beneficial tool to search for jobs. According to Hani Mansour, PhD, the use of internet to search
for jobs reduces the length of time the person is unemployed by 25%. Another study concluded
that 15% of the workers who were unemployed in 1998 looked for jobs through the internet
(Peter Kuhn and Mikal Skuterud). On the other hand in 2004 studies have contradicted this
analysis by saying that the internet job search in fact increases a persons time length of
unemployment.

Over all this process of job search through the internet has only acted as a supplement rather than
a replacement to the more traditional process of job searching. Statistics shows that 7% of the
people who became employed used internet as a tool to search for varying job opportunities.
According to the study conducted by Peter Kuhn and Mikal Skuterud concluded that those
people who had used the internet to seek jobs experienced shorter phases of unemployment,
hardly two to three months, as compared to those who did not use the internet, more than three to
four months. Since there isnt any effective measurements to calculate the impact of the internet
up on the labour market the reduction in unemployment may be considered too small. Thus it is
unclear whether internet job searching engines are equally productive to other search methods.

In recent times the researches came to the conclusion that either the internet was not an effective
tool or that the people who looked for internet jobs were not as qualified since the depth of the
internet had evolved greatly. Now days there are hundreds job search websites on the internet
which have been edited and improved over the years since its birth. Often employers have
detailed listings and search engines positioned at their websites; this further makes the searching
process simultaneously easier for the employer as well as the applicant. One possible reason for
this observed inefficiency of internet searches is Cyclical Unemployment or involuntary
unemployment (demand deficient unemployment). Due to the recent of US and Europe, the
demand for jobs in manufacturing and services sectors decreased considerably. The output of
major labor intensive industries declined due to high unemployment and decreased in
consumers purchasing powers. Downturn in businesses disabled them to absorb more workers
irrespective of fast and convenient available workforce through internet.
Further the social media has drastically changed the perceptions of the people about the
dynamics as to how to search for jobs. Websites such a Face book and Twitter have provided a
platform based on a broad spreading network to further enhance communication in general or
specific industry. According to Liz Hruska, Social net working allows one to immediately tap
into all your friends and acquaintances. On the other hand social media can also harm ones
efforts to search for jobs. This is because of the recent cases of people losing their jobs because
of something they said on the social media. Internet also at the same time provides employers to
a background check of applicants these days.

By analyzing the characteristics of the internet one can conclude that aspects such as
individualistic personalities of its pioneers and main proponents, and the pressure it creates to
link pay much more closely to performance, leads one to believe it might not be as flexible
towards unions. There are two aspects that are highlighted as far as unions are concerned: firstly
the internet plays the role of the union- organizing tool; and secondly the potential impact of
internet up on unions is less obvious. Basically industrial unions are based on firm level and ten
to do well when attached to single employers for a long period of time. Such unions do not
benefit from the reduced cost of mobility due to the online job searching services.

In this new era of technological advancement, internet has become a far more preferable medium
for both jobseekers and employers. At the same time has resulted in the reduction in the frictional
unemployment, increased productivity, and as it will cause compensation to be tied more closely
to productivity it may probably increase wage inequality. The Internet may be a helpful tool in
times of economic crisis and may assist governemnts to take steps against financial and banking
systems from crumplingand lower the aftermath of the econmic effects of the credit crunch. In
Policy makers should instruct the statistical agencies to explore options of measuring aggregate
job search. As the Internet is now able to provide job matching services at less costly prices,
governments should start reconsidering their roles as providers of such services.
 Cited Work

Op-Ed: Study finds Internet job search reduces time spent unemployed. available
at: http://digitaljournal.com/article/312400#ixzz1p0pJr4nk

THE EFFECT OF CHANGES IN LABOR MARKETS ON THE NATURAL RATE OF

UNEMPLOYMENT, April 2002,The Congress of the United States Congressional Budget
Office.

David H. Autor, Wiring the Labor Market, Journal of Economic Perspectives, vol. 15, no. 1
(Winter 2001), pp. 25-40.

Peter Kuhn and Mikal Skuterud, Job Search Methods: Internet vs. Traditional, Monthly Labor
Review, vol. 123, no. 10 (October 2000), pp. 3-11.

Peter Kuhn and Mikal Skuterud, Does Internet Job Search Reduce Unemployed Workers
Jobless Duration? (paper presented at the Society of Labor Economists conference, Austin,
Texas, April 2001).

CBOs current estimate for the natural rate of unemployment is 5.2 percent; the Administrations
is 4.9 percent.

Andrew Sharpe and Alexander Murray, The State of Private Sector Electronic Labour Exchange
Services in Canada, CSLS Research Report No. 2011-01,February 2011.

Betsey Stevenson, The Impact of the Internet on Worker Flows, December 2006.

Peter Kuhn, POLICIES FOR AN INTERNET LABOUR MARKET. OCTOBRE 2000.

An Introductory Guide for Employers Organizations, TACKLING YOUTH EMPLOYMENT

CHALLENGES, 2011