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If a substantial (though admittedly I have no idea how large) part of the natural rate of unemployment is caused by the job search, do more efficient means of communication create more efficient labor markets, and if so, can anyone quantify their impact with data?

Jason Nichols
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    Unless you have a natural or quasi-natural experiment, where a subset of the population randomly gets treated with Craigslist, I don't think there is any way of getting even a respected first approximation. – FooBar Dec 28 '14 at 15:44
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    Actually, I take that back. You could estimate the effect of Uber onto the taxi profit margin (using depreciation in value of the licences) in a search-matching model, isolate the part that comes from the improved matching function, and then argue that improvements in efficiency/coordination would be similar for Craigslist. – FooBar Dec 28 '14 at 15:52
  • I was thinking of comparing population before and after but i don't know... Maybe looking at different age groups to see if early adopters saw a reduction (i.e. 18-36 v 50-64 ca 2000). Just curious if anyone else knows if it's been done. – Jason Nichols Dec 28 '14 at 15:53
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    But self selection... – FooBar Dec 28 '14 at 16:02
  • I agree, I'm spit balling here. It seemed like an interesting area of research, but I wanted to see if it was already well-trod ground. – Jason Nichols Dec 28 '14 at 16:04
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    Heckman correction... – Plissken Dec 28 '14 at 18:27
  • Craigslist? No, because Craigslist doesn't advertise what most people would call "real" jobs (unless you consider selling old junk and prostitution to be real jobs). Professional networking sites like LinkedIn? Maybe. The issue they try to solve isn't with reducing unemployment so much as easing frictional unemployment. To test this, I suppose you could get unemployment data from BLS for people that have been unemployed 3 months or less and see how fast they found a real job pre-LinkedIn and post-LinkedIn. – rocinante Dec 28 '14 at 18:44
  • There's a paper by two Stanford graduate students about TaskRabbit, which gets at some of these issues. – dimitriy Dec 31 '14 at 20:10

1 Answers1

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Kroft and Pope (working paper, published in JoLE 2014) ask exactly this question, and their tentative answer is "no".

They view Craigslist as a unique opportunity to study the benefits of online job sites, since it grew rapidly and somewhat idiosyncratically while other popular sites grew steadily (leaving few opportunities for identification). That said, they don't have a great identification strategy - they just treat the rise of Craigslist starting in 2005 as an event study and compare MSAs where it grew quickly to MSAs where it grew sluggishly, making the case via various alternative specifications and falsification tests that there isn't any substantial bias.

Interestingly, they find that Craigslist does seem to have crowded out traditional newspaper classified ads, but had no discernible effect on unemployment. (This doesn't surprise me too much, since Craigslist seems like a pretty minor advance over traditional classifieds for job search, and if anything you'd expect a contribution from other sites that are more specialized or make more efforts to facilitate matching.)

On the other hand, they find that Craigslist does seem to have some effect on rental vacancy rates. Perhaps simple, searchable Craigslist-style classified ads facilitate rental search (I know they have for me) but are too crude to do much for employment.

nominally rigid
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