The project was awarded by CONICYT as a three-year commitment.
The research project “Search models: implications for markets, social interactions and public policy” will be led by project director Alexandre Janiak, economist and researcher at the Millennium Institute for Research in Market Imperfections and Public Policy (MIPP).
Based on data from the National Statistics Institute (Spanish: INE), the Labour Bureau (Spanish: DT) and the OCDE, the number of people who are currently employed in Chile is 7.9 million, while more than half a million of working-age people are unemployed.
Another aspect revealed by the OCDE is that, in regards to the composition of the unemployed, the labour market in our country is characterized by strong inequalities: very low participation rates are dominant among women, with the youth encountering serious difficulties when trying to land a job.
This type of market imperfections in the labour market is one of the topics which Alexandre Janiak, Ph.D. in Economics from the joint program of ECARES, Free University of Brussels (Belgium) and Sciences-Po Paris (France), and researcher at MIPP, will be researching as part of his latest project: “Search models: implications for markets, social interactions and public policy”.
The project has been awarded a yearly financial grant of 65 million pesos for three years through the Research Partnership Program (PIA) run by CONICYT.
Imperfections in the Labour Market
Search models examine the process prior to the exchange of goods and services between market agents. In the labour market, a search model can analyze the frictions and imperfections that occur before an employee and employer enter into an employment contract.
“Unemployed individuals have to first search for a job before they can get one, and companies, on their end, in order to fill a vacancy need to first publish a job posting, interview applicants, and select the ideal candidate. This process is lengthy and suffers from imperfections”, explains the director. “The exchange between two agents in the labour market takes time and produces imperfections because people searching for jobs cannot work, and furthermore they are not producing any goods or earning income, creating thus an inequality between the unemployed and those who have a job, since the people who are gainfully employed are earning income and gaining experience, which is valued in the labour market, while the unemployed are in fact losing experience”, Janiak continues, offering a glimpse on the early results of his research.
“A search model pinpoints the ups and downs of this process and explains, for example, why unemployed people are not able to find a job, among others”, Janiak reports about some research implications and work carried out in collaboration with Benjamín Villena and Elton Dusha, both researchers at MIPP, and Sofia Bauducco, economist and researcher at Central Bank of Chile.
In essence, the project is intended to be a contribution to the country’s public policy and will enjoy the support of MA and Ph.D. students, including a post-doctoral fellow. The results stemming from the research component of this Proyecto Anillo will be presented and discussed in various workshops that will be broadcasted to a non-academic audience.