Let’s be real: the friends you keep tell you what to do, from what d-list music is now cool to who you’re allowed to sleep with. And everyone has some members in their crew who moms don’t approve of. But instead of blacklisting the borderline alcoholics or self-obsessed fame whores, your new frenemies may be the fellow unemployed.
According to a new study from the World Bank (via the NYT), if you and a friend are out of a job, both of you are less likely to search with the same intensity as if you didn’t have any unemployed friends.
The lesson to be drawn by these findings is that one’s employment decisions have a strong externality on other’s labor supply and job search effort, through comparison effects. Upon losing a job, if a relevant other is also jobless then both individuals search with less intensity. In the opposite scenario, if all relevant others are employed, search intensity increases for the unemployed…
If others are unemployed, I will search less and extend my unemployment duration, in turn affecting others’ return to work.
In other words, instead of sending out resumes and going on informationals, you and your bro are chugging brewskis while mapping out your perfect fantasy football league. (Or to be gender neutral/equally stereotypical of the opposite sex: you and your girl are sipping Franzia while watching reruns of Real Housewives). A fantasy land of free time, cheap alcohol, and no need to ever change your underwear.
This probably explains why unemployed love usually doesn’t last too long either.