On the Job Search and the Wage Distribution
AbstractEstimates of the structural parameters of a job separation model derived from the theory of on-the-job search are reported in this paper. Given that each employer pays the same wage to observably equivalent workers but wages are dispersed across employers, the theory implies that an employer's separation flow is the sum of an exogenous outflow unrelated to the wage paid and a job-to-job flow that decreases with the employer's wage. The specification estimated allows worker search effort to depend on the wage currently earned. The empirical results imply that search effort declines with the wage paid, as the theory predicts, using Danish IDA data for the years 1994-1995. Furthermore, the estimates for the full sample and four occupational sub-samples explain the employment effect, defined as the horizontal difference between the distribution of wages earned and the distribution of wages offered.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics in its series CAM Working Papers with number 2004-09.
Length: 36 pages
Date of creation: Mar 2003
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