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The Effect of Search Effort on the transition from Unemployment to Work: Evidence from a Cross Section of Ghanaian Formal Sector Workers

Opoku Nyarko, Christopher and Baah-Boateng, William and Nketiah-Amponsah, Edward (2014): The Effect of Search Effort on the transition from Unemployment to Work: Evidence from a Cross Section of Ghanaian Formal Sector Workers. Published in: Journal of Self-Governance and Management Economics , Vol. 2, No. 2 (2014): pp. 1-17.

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Abstract

While the role of search effort in the transition from unemployment to employment is not contentious, there is paucity of empirical evidence on the nexus between search effort and the duration of unemployment, especially in developing countries. Hence, this paper focuses on the time period in which the individual exits unemployment, using search intensity as a key explanatory variable. Data for the study is sourced from a survey of 404 formal sector workers in Accra who secured their first employment from 2005 and 2012. We disaggregated the transition period into three intervals namely; less than 1 month, between 1 and 12 months and more than 12 months, in order to achieve this objective. Using the multinomial logistic regression, we found that the use of multiple methods (search intensity) in the search process has a highly significant (p<0.001) effect on the probability of entering employment. In particular, using two additional methods decrease the probability of finding employment in less than 1 month by 11.4 percentage points but raises the prospect of entering into employment in the 1–12 months period by 9.8 percentage points. Other variables that significantly explain the duration of unemployment include age, years of schooling, sector of employment (private sector), family support and the year of employment. The paper concludes with a recommendation to realign the Labor Market Information System to the dynamics of the labor market.

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