Association for Public Policy Analysis & Management

Longer unemployment spells are associated with a number of negative outcomes for workers, but the role of search behavior and employment services in generating these outcomes is not well understood. In this paper, I show that workers who are unemployed longer are more likely to search for and accept jobs in occupations different from their previous work. Also, I present evidence that these occupational changes occur as a result of duration dependence as opposed to worker heterogeneity, and that workers who receive job-search services are less attached to their former occupations and exhibit less duration dependence in occupation switching. As these results may be driven by the selection of workers into services, I show that they are robust to the use of simulated instruments. Further, while a directed search model would suggest that a slack labor market should be associated with more rapid occupation switching, workers shift more slowly to searching in new occupations when unemployment is high. Employment services may help with this search-and-learning, particularly when labor markets are weak.