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Accounting For Endogenous Search Behavior in Matching Function Estimation

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  • Borowczyk-Martins, Daniel
  • Jolivet, Grégory
  • Postel-Vinay, Fabien

Abstract

We show that equilibrium matching models imply that standard estimates of the matching function elasticities are exposed to an endogeneity bias, which arises from the search behavior of agents on either side of the market. We offer an estimation method which, under certain assumptions, is immune from that bias. Application of our method to the estimation of a basic version of the matching function using aggregate U.S. data from the Job Openings and Labor Turnover Survey (JOLTS) suggests that the bias is quantitatively important.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8471.

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Date of creation: Jul 2011
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Handle: RePEc:cpr:ceprdp:8471

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Keywords: Job Finding; Matching Function Estimation; Unemployment; Vacancies;

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Cited by:
  1. Francesco Furlanetto & Nicolas Groshenny, 2012. "Matching efficiency and business cycle fluctuations," CAMA Working Papers 2012-34, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  2. Rose, Giuseppe, 2013. "Endogenous ranking in a two-sector urn-ball matching process," Economics Discussion Papers 2013-40, Kiel Institute for the World Economy.
  3. Bart Hobijn & Aysegül Sahin, 2012. "Beveridge curve shifts across countries since the Great Recession," Working Paper Series 2012-24, Federal Reserve Bank of San Francisco.

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