The Impact of Higher Job Application Rates on U.S. Job Finding Rates

In recent decades, the widespread use of computers has made the job application process faster and easier. How did this ability to search and apply online for employment affect the average worker’s success in finding a job?

In a March Economic Synopses essay, St. Louis Fed economist and Economic Policy Advisor Serdar Birinci, Bank of Canada Principal Researcher Kurt See and Bank of Canada Research Advisor Shu Lin Wee examined job application, offer and acceptance rates over the past four decades.

To study the evolution of job applications and their outcomes, the authors compared data from the Employment Opportunities Pilot Projects (EOPP), which covered the 1979-80 period, with data from the Federal Reserve Bank of New York’s Survey of Consumer Expectations (SCE), which covered the 2013-19 period. The data examined the labor activities of jobless workers ages 25 to 65.

They found that the number of monthly job applications increased over the last 40 years. (See the figure below.)

Distribution of Job Applications Submitted per Month (Percent)

 

NOTE: This figure plots the distribution of the monthly number of job applications submitted by unemployed workers, using data from the Employment Opportunities Pilot Projects (EOPP) and the Survey of Consumer Expectations (SCE).

Between 1979 and 1980, the majority of jobless workers submitted three or fewer applications  a month. Between 2013 and 2019, about 40% filed at least nine applications per month.

“Notably, the percentage of unemployed workers who submitted more than 10 applications per month grew from 15% in the 1979-80 period to 30% in the 2013-19 period,” they wrote.

Yet while job applications increased, the job finding rate—the rate at which unemployed workers found jobs—didn’t increase, the authors also found.

“This holds true even when we account for temporary unemployment and demographic shifts in the US labor force,” they wrote.

(A figure showing the job finding rate can be found in their Economic Synopses essay.)

More Applications Affect Competition

To understand why the overall job finding rate didn’t increase, the authors looked at two outcomes of the job application process: the job offer rate and the job offer acceptance rate.

Over the four-decade span, they found that the chance of not receiving a job offer jumped from 38% to 43% despite more applications.

“As unemployed workers simultaneously send out more applications, competition for offers increases, which lowers the likelihood of receiving an offer for a given worker,” they wrote.

When they looked at offer acceptances rates, they found that for those workers who received more than one offer during a month of joblessness, the average acceptance rate dropped from 39% in the 1979-80 period to 20% in the 2013-19 period.

They noted that the drop in acceptance rates was greater than the decline in the chance of getting an offer.

“Further, competition goes both ways: Firms may have a larger pool of applicants to choose from, but workers also have more options the more applications they send,” the researchers wrote. “Their probability of accepting a given offer declines as workers expect to receive better offers from other applications.”

(A figure showing the job offer rate and the job acceptance rate can be found in their Economic Synopses essay.)

Conclusion

The authors found evidence that there were two mechanisms working to keep the job finding rate stable over this 40-year span.

• Rising applications among all workers intensified competition for offers, lowering a given worker’s chance of receiving an offer.
• Those workers with a job offer were less likely to take it because they applied for more jobs and thus could consider other possible offers.

“Declines in both job offers and offer acceptance rates are forces behind the lack of an increase in job-finding rates over time, despite the increase in the number of job applications,” the authors concluded.

(For a more detailed analysis of their work, see the authors’ working paper.)