Easing The Job Search During COVID-19
Currently, many workplaces across the world are at least partially closed due to the COVID-19 pandemic. According to figures from the International Labor Organization, a UN agency committed to advancing social and economic justice through international labor standards,5 These closures have caused an estimated 14% loss in working hours worldwide, something that is reflected in the forecasted 4.9% GDP reduction globally this year.14 As a consequence, millions of people are expected to move into extreme poverty.13
Employment affects the quality of life and development of the most vulnerable people, and consequently, all of society.12 Therefore, any country that wishes to promote prosperity and inclusion in a sustained manner over time must seek to offer jobs that meet the demand of the population, especially in the context of a fragile economy.12 Despite this, removing barriers to job opportunities, with an emphasis on disadvantaged sectors (women, young people, etc.), is no easy task.
In the face of this, behavioral economics has contributed to the identification of cognitive biases present during job searches. Perhaps the unemployed do not act rationally when trying to get work — despite the potential benefits they would have by doing so — due to systematic deviations that influence their decision-making.6
A team of researchers led by Linda Babcock, the head of the Department of Social and Decision Sciences at Carnegie Mellon University, pointed to the difficulty involved in this type of job search. This difficulty may be even greater than what is assumed by mainstream economics due to two problems: the need for relevant and easily understandable information, and the willpower of job seekers.2
To provide a solution, there exist low-cost interventions that could reduce the time a person is unemployed. These interventions could serve as study opportunities for policymakers during a time in which a simpler job search process is highly desirable for society as a whole.
References
1. Altmann, S., Falk, A., Jager, S., & Zimmermann, F. (2018). Learning about job search: A field experiment with job seekers in Germany. Journal of Public Economics, 164,33-49. doi:10.1016/j.jpubeco.2018.05.003
2. Babcock, L., Congdon, W. J., Katz, L. F., & Mullainathan, S. (2012). Notes on behavioral economics and labor market policy. IZA Journal of Labor Policy, 1(1), 2. doi:10.1186/2193-9004-1-2
3. Abel, M., Burger, R., Carranza, E., & Piraino, P. (2019). “Bridging the Intention-Behavior Gap? The Effect of Plan-Making Prompts on Job Search and Employment.” American Economic Journal: Applied Economics, 11 (2): 284-301. doi:10.1257/app.20170566
4. International Labour Organization (2012). Jobs and livelihoods at the heart of the post-2015 development agenda. Recovered from https://www.ilo.org/global/about-the-ilo/newsroom/statements-and-speeches/WCMS_205641/lang–en/index.htm
5. International Labour Organization (2020). COVID-19 and the world of work. Updated estimates and analysis (5 ed.). Retrieved from https://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/documents/briefingnote/wcms_749399.pdf
6. Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus and Giroux.
7. Kircher, P. (2020). Search Design and Online Job Search–New Avenues for Applied and Experimental Research. Labour Economics, 64, 101820. doi:10.1016/j.labeco.2020.101820
8. Martínez, D., Rojas, A. & Scartascini, C. (2020). Behavioral economics may help to combat the coronavirus. Inter-American Development Bank.
9. Mühlböck, M., Kalleitner, F., Steiber, N., & Kittel, B. (2020). Information, Reflection, and Successful Job Search: A Nudging Experiment. SSRN Electronic Journal. doi:10.2139/ssrn.3576740
10. Spinnewijn, J. (2010). Unemployed but Optimistic: Optimal Insurance Design with Biased Beliefs. LSE working paper, London
11. Thaler, R. H., & Sunstein, C. (2008). Nudge: Improving decisions about health, wealth, and happiness. New Haven, CT: Yale University Press.
12. World Bank (2018). Jobs at the Core of Development: Transforming Economies and Societies through Sustainable Employment. Recovered from https://www.worldbank.org/en/results/2018/02/13/jobs-at-the-core-of-development
13. World Bank (2020). COVID-19 to Plunge Global Economy into Worst Recession since World War II. Recovered from https://www.worldbank.org/en/news/press-release/2020/06/08/covid-19-to-plunge-global-economy-into-worst-recession-since-world-war-ii
14. International Monetary Fund (2020). Update on the world economic outlook. Recovered from https://www.imf.org/es/Publications/WEO/Issues/2020/06/24/WEOUpdateJune2020
About the Authors
Marco Carrasco Villanueva
Marco Carrasco holds an M.Sc. in Economics and Psychology from the University of Paris 1: Panthéon - Sorbonne, Summa Cum Laude. He has previously worked at the Organization of American States in Washington, DC, and the Ministry of Development and Social Inclusion of Peru. He has researched at the Shanghai Academy of Social Sciences in China and the National University of San Marcos in Peru. He is a Co-Founder of the Peruvian NGO Behavioral Economics & Data Science Team (BEST) and has been a lecturer and guest speaker in various international seminars and events related to his areas of specialization: behavioral economics, and Asia and Latin America economic development. He is a current MPA-ID candidate at Harvard Kennedy School, where he is also conducting research and has assumed the Professional Development Chair of Harvard Behavioral Insights Student Group.
Braulio Arteaga
Braulio is a Peruvian economics student at the National University of San Marcos. He currently works in the Impact Evaluation area of the Ministry of Housing, Construction and Sanitation of Peru. His interests include the application of behavioral economics and data science in public policy design and implementation. He is a co-founder and writer at “La Rotonda”, an organization that promotes participation and debate regarding current economic trends and topics. He is also affiliated with EvalYouth Perú, a network that promotes the culture and evaluation practice within the public and development spheres.
About us
We are the leading applied research & innovation consultancy
Our insights are leveraged by the most ambitious organizations
“
I was blown away with their application and translation of behavioral science into practice. They took a very complex ecosystem and created a series of interventions using an innovative mix of the latest research and creative client co-creation. I was so impressed at the final product they created, which was hugely comprehensive despite the large scope of the client being of the world's most far-reaching and best known consumer brands. I'm excited to see what we can create together in the future.
Heather McKee
BEHAVIORAL SCIENTIST
GLOBAL COFFEEHOUSE CHAIN PROJECT
OUR CLIENT SUCCESS
$0M
Annual Revenue Increase
By launching a behavioral science practice at the core of the organization, we helped one of the largest insurers in North America realize $30M increase in annual revenue.
0%
Increase in Monthly Users
By redesigning North America's first national digital platform for mental health, we achieved a 52% lift in monthly users and an 83% improvement on clinical assessment.
0%
Reduction In Design Time
By designing a new process and getting buy-in from the C-Suite team, we helped one of the largest smartphone manufacturers in the world reduce software design time by 75%.
0%
Reduction in Client Drop-Off
By implementing targeted nudges based on proactive interventions, we reduced drop-off rates for 450,000 clients belonging to USA's oldest debt consolidation organizations by 46%
