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An Empirical Equilibrium Search Model of the Labor Market

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  • Gerard J. van den Berg
  • Geert Ridder

Abstract

The authors investigate whether an equilibrium search model, in which the wage offer distribution is endogenous, is able to describe observed labor market histories. They find that the distributions of job and unemployment spells are consistent with the data, and qualitative predictions of the model for the wages set by employers are confirmed. The authors distinguish between separate segments of the labor market, and they show that productivity heterogeneity is important to obtain an acceptable fit to the data. The results are used to estimate the firms' monopsony power. The effects of changes in the mandatory minimum wage are examined.

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Bibliographic Info

Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 66 (1998)
Issue (Month): 5 (September)
Pages: 1183-1222

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Handle: RePEc:ecm:emetrp:v:66:y:1998:i:5:p:1183-1222

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