Research shows that financial pressure – implied as a consequence of benefit sanctions or exhaustion – prompts the unemployed to intensify their job search. However, there is less agreement about whether that intensified job search produces better quality job outcomes. Building on Self-Determination Theory we posit that financial pressure is a controlled motivator to search for work. Controlled motivators are conducive to goal pursuit (job search activity), yet unfavorable to goal achievement (job search success and job quality). Using the HILDA longitudinal data for Australia, we are able to include direct measures of both financial pressure (cash flow problems and hardship), objective job quality (hourly pay and hours worked) as well as subjective job quality (satisfaction with pay and hours). We find that financial pressure intensifies job search without improving the job find rate and job quality outcomes if a job is secured. Interestingly, if a job is secured the unemployed who searched under financial pressure perceive the job to be of lower quality (in terms of satisfaction with pay and hours worked) even though objectively (in terms of actual pay and hours worked) it is similar to the jobs found by the unemployed who searched without financial pressure. Policy implications are discussed.
|Series||ROA Research Memoranda|
- j64 - Unemployment: Models, Duration, Incidence, and Job Search
- j08 - Labor Economics Policies
- j28 - "Safety; Job Satisfaction; Related Public Policy"
- j32 - "Nonwage Labor Costs and Benefits; Private Pensions"
- job search
- job quality
- financial pressure