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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
  • Aïco Van Vuuren

Abstract

Equilibrium search models are useful tools for the evaluation of labor market policies. Recently developed equilibrium search models of the labor market are able to fit the wage distribution perfectly with longitudinal labor supply data, by estimating an appropriate distribution of labor productivity across firms. This paper formally compares such structural estimates to their directly observed counterparts in firm data. More generally, we investigate the extent to which these models are able to explain the observed distributions of wages, productivities and firm sizes across firms, as well as the extent to which they are able to explain the observed relationships between these variables across firms. The parameters that capture search frictions are estimated with worker data that are matched to the firm data.

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  • Gerard J. Van Den Berg & Aïco Van Vuuren, 2002. "Using Firm Data to Assess the Performance of Equilibrium Search Models of the Labor Market," Annals of Economics and Statistics, GENES, issue 67-68, pages 227-256.
    • Handle: RePEc:adr:anecst:y:2002:i:67-68:p:227-256
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    Cited by:

    1. Jan Eeckhout & Philipp Kircher, 2011. "Identifying Sorting--In Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(3), pages 872-906.
    2. Tomi Kyyrä, 2007. "Estimating Equilibrium Search Models from Finnish Data," Finnish Economic Papers, Finnish Economic Association, vol. 20(2), pages 139-165, Autumn.

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