On the Job Search and Job Competition: Relevance and wage impact in the UK

In the literature job competition is often measured by the unemployment
rate. By neglecting on-the-job search, however, the unemployment rate
is likely to be a biased measure of job competition: various studies
have suggested that on-the-job search varies over time and across groups
of people, and might have a relevant impact on the outflow from
unemployment. In the UK, for example, less than half of people who are
actively looking for a job are unemployed; the other half already has a job.
This paper estimates the direct impact of job competition on individual
wages in the UK using data from the quarterly Labour Force Survey for
the period 1993-2005. Measures of job competition based only on the
unemployment rate are compared to measures that account for on-the-job
search as well as regional accessibility. The results suggest that job
competition has a negative impact on wages, and that this impact is not
equally distributed across workers.