A multimarket theory of optimal search suggests that job seekers will respond to a weakening market by adjusting their search strategies at the extensive margin (which markets to enter) and the intensive margin (how many applications to submit per market). Meanwhile, employers respond to the weakening market by raising their hiring standards. The equilibrium suggestst that high quality applicants will obtain an increased share of academic interviews in weak markets while applicants from weaker schools will increasingly secure interviews outside of the academic market. Empirical results show that in the bust market, graduates of elite schools shifted their search strategies to include weaker academic institutions, while graduates of lower ranked schools shifted their applications away from academia and toward the business sector. In bust conditions, academic institutions increasingly concentrate their interviews on elite school graduates, women and U.S. residents.
