SIGNIFICANCE OF THE CONCEPT AND THEORY OF SEARCH UNEMPLOYMENT
From what has been said earlier, you understand the significance of the theory of search unemployment as an attempt to endow realism to the elegant neoclassical model of employment and output. You should also understand the practical significance of the concept of search unemployment as it has worked itself out in the United States and in some of the countries of the European Union.
The idea of search unemployment gained importance in the US economy in the 1990s when the social security system was being restructured in that country. It is easily understandable that the ability and desire of a person to keep looking for a better job and to remain unemployed in the mean time depends in part on the availability of unemployment benefits under such a system. The unemployment that arises when a person quits a job to have more time to look for a better job, or when an unemployed delays accepting a job in the hope of finding a better one, is of course the search unemployment that we have been discussing. If all jobs are the same, an unemployed person will take the first one offered. If some jobs are better than others, it is worthwhile. searching and waiting for a good one. The higher the unemployment benefits, the more likely people are to keep searching for a better job, and the more likely they are to quit their current job to try to find a better one. It was consideration of these kinds that prompted the United States to restructure their unemployment benefits system in the 1990s. If unemployment rates in the European Union are by and large higher than those prevailing in the United States in recent years, part of the explanation is the fact that it is not as easy, as in the countries of the European Union, to obtain unemployment benefits in the United States after the revamping of their unemployment benefits system.