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Using Firm Data to assess the Performance of Equilibrium Search Models of the Labor Market

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  • Gerard J. van den Berg

    ()

  • Aico van Vuuren

    ()
    (Vrije Universiteit Amsterdam)

Abstract

Equilibrium search models are useful tools for the evaluation oflabor market policies. Recently developed equilibrium search models of thelabor market are able to fit the wage distribution perfectly with longitudinallabor supply data, by estimating an appropriate distribution of laborproductivity across firms. This paper formally compares such structuralestimates to their directly observed counterparts in firm data. More generally,we investigate the extent to which these models are able to explain theobserved distributions of wages, productivities and firm sizes across firms, aswell as the extent to which they are able to explain the observed relationshipsbetween these variables across firms. The parameters that capture searchfrictions are estimated with worker data that are matched to the firm data.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-067/3.

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Date of creation: 31 Jul 2000
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Handle: RePEc:dgr:uvatin:20000067

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Web page: http://www.tinbergen.nl

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  1. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
  2. Andrews, Donald W K, 1988. "Chi-Square Diagnostic Tests for Econometric Models: Theory," Econometrica, Econometric Society, vol. 56(6), pages 1419-53, November.
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Cited by:
  1. Gerard J. van den Berg & Aico van Vuuren, 2006. "The Effect of Search Frictions on Wages," Tinbergen Institute Discussion Papers 06-077/3, Tinbergen Institute.
  2. Eeckhout, Jan & Kircher, Philipp, 2009. "Identifying Sorting: In Theory," IZA Discussion Papers 4004, Institute for the Study of Labor (IZA).
  3. Tomi Kyyrä, 2001. "Estimating Equilibrium Search Models from Finnish Data," Discussion Papers 256, Government Institute for Economic Research Finland (VATT).
  4. Chéron, Arnaud & Hairault, Jean-Olivier & Langot, François, 2004. "Labor Market Institutions and the Employment-Productivity Trade-Off: A Wage Posting Approach," IZA Discussion Papers 1364, Institute for the Study of Labor (IZA).

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