In the two-sided search model, an unemployed worker's chances of finding a job depend on
A) his or her search effort.
B) employment insurance benefits.
C) opportunities in other countries.
D) labour market tightness.
E) the reservation wage.

Question

Quizplus · Accepted Answer

In the two-sided search model, the labour market tightness plays the most significant role in determining the chances of an unemployed worker finding a job. This concept refers to the ratio of job vacancies to job seekers in a particular labor market. In a tight labor market, there are more job vacancies than job seekers, leading to a higher chance of matching and vice versa. Therefore, option D is the correct choice. A worker's search effort (A) and reservation wage (E) also affect their job search outcomes, but not as substantially as labor market tightness. Employment insurance benefits (B) and opportunities in other countries (C) do not influence the job search chances in the model.

In the Two-Sided Search Model, an Unemployed Worker's Chances of Finding