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Search Friction in the U.S. Labor Market

Author

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  • Audra J. Bowlus

    (University of Western Ontario and Vrije Universiteit Amsterdam)

  • Shannon N. Seitz

    (University of Western Ontario)

Abstract

In this paper we determine the feasibility of using data from thePanel Study of Income Dynamics to estimate the Burdett-Mortensengeneral equilibrium search model. The data contain sufficientinformation on wages, labor force states, durations, and transitionsto generate estimates of the model's structural parameters. Ouranalysis compares the relative labor market search friction forblack and white male household heads. In general we find blacks facegreater search friction while unemployed than whites, but a similarlevel while employed. Within the model this finding impliessubstantial productivity differentials are needed to generate theblack-white wage differentials found in the data.

Suggested Citation

  • Audra J. Bowlus & Shannon N. Seitz, 1998. "Search Friction in the U.S. Labor Market," Tinbergen Institute Discussion Papers 98-113/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:19980113
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    References listed on IDEAS

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    1. Bowlus, Audra J & Kiefer, Nicholas M & Neumann, George R, 1995. "Estimation of Equilibrium Wage Distributions with Heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(S), pages 119-131, Suppl. De.
    2. van den Berg, Gerard J, 1999. "Empirical Inference with Equilibrium Search Models of the Labour Market," Economic Journal, Royal Economic Society, vol. 109(456), pages 283-306, June.
    3. Gerard J. van den Berg & Geert Ridder, 1998. "An Empirical Equilibrium Search Model of the Labor Market," Econometrica, Econometric Society, vol. 66(5), pages 1183-1222, September.
    4. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
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