We provide an analytical framework for explaining how individuals without jobs end up in different labour market states. We extend a simple search model to explain why some unemployed individuals choose to search and others choose not to search. We use this descriptive model to identify factors that could influence an individual’s rational decision to be in a particular labour market state. It further highlights the idea of different degrees of labour force attachment. Different degrees of labour force attachment may imply both different intensities of searching and different degrees of responsiveness to given changes in the labour market environment.
Working Paper (Interest) 28