Job Search Methods: the Choice between the Public and the Private Sector

It is well known that the lack of information often leads to the difficulty of decentralised decision units solving coordination problems through market functioning. In labour market the lack of information is often characterised by asymmetric information on heterogeneous labour skills and the related productive capabilities [Spence, 1973] and coordination mainly concerns the matching of vacant jobs with unemployed individuals, which results from a costly and time-consuming process. Coordination involves also the matching between job skills and vacancies requiring specific skills. This process is characterised by the existence of uncertainty as unemployed individuals know the general features of wage distribution in an area but ignore which firms are offering each wage. Accordingly, coordination on the side of unemployed workers involves a searching activity based on the gathering of information on available vacancies, the related wage and skill, whereas on the side of firms the gathering of information on the characteristics of individuals willing to fill the vacancies like their skills. As to unemployed workers, the distinction among search methods plays a significant role in the final result of their job search.