IZA DP No. 8518: Testing the Importance of Search Frictions, Matching, and Reservation Prestige Through Randomized Experiments in Jordan
published in: IZA Journal of Labor Economics, 2015, 4:7
Unemployment rates for tertiary-educated youth in Jordan are high, as is the duration of unemployment. Two randomized experiments in Jordan were used to test different theories that may explain this phenomenon. The first experiment tests the role of search and matching frictions by providing firms and job candidates with an intensive screening and matching service based on educational backgrounds and psychometric assessments. Although over 1,000 matches were made, youth rejected the opportunity to even have an interview in 28 percent of cases, and when a job offer was received, rejected this offer or quickly quit the job 83 percent of the time. A second experiment builds on the first by examining the willingness of educated, unemployed, youth to apply for jobs of varying levels of prestige. We find youth apply to only a small proportion of the job openings they are told about, with application rates higher for higher prestige jobs than lower prestige. Youth fail to show up for the majority of interviews scheduled for low prestige jobs. The results suggest that reservation prestige is an important factor underlying the unemployment of educated Jordanian youth.