Abstract
Employed workers who expect the labor market to worsen perceive a greater risk of losing their own jobs and search more intensively while employed. Using survey data, I show that this relationship is driven by workers’ fear of job loss rather than by their expectations about finding a new job. I interpret the pattern as precautionary on-the-job search: workers look for outside offers to protect themselves against the possibility of unemployment. To quantify this channel, I embed the behavior in a search-and-matching model that separates precautionary search from ordinary job-ladder search. The model matches the empirical search response, offer receipt, total employer-to-employer mobility, and the share of employer-to-employer moves related to job loss. The calibrated model implies that job-loss beliefs matter for how much employed workers search and for the cyclicality of that search.
