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Estimating Mobility Rates in Search Models with Initial Condition Problems

Author

Listed:
  • Gadi Barlevy

    (Federal Reserve Bank of Chicago)

  • H. N. Nagaraja

    (Ohio State University)

Abstract

Previous empirical work on job search has proposed different approaches to estimating mobility rates assumed in models of search. However, these methods either only work for specific models of wage determination, or else require that we know the initial distribution of productivity for workers in our sample. In this paper we show it is possible to estimate mobility rates without having to restrict attention to models in which wages are constant over the course of a job or to assume that the initial distribution of productivity is known. More generally, the approach we propose allows us to freely estimate one degree of unobserved heterogeneity, be it in initial conditions or mobility rates. Applying our results to data from the NLSY suggests that that the theoretical restrictions on the initial distribution of productivity implied by the standard model can overstate the extent of frictions to upward mobility. (Copyright: Elsevier)

Suggested Citation

  • Gadi Barlevy & H. N. Nagaraja, 2010. "Estimating Mobility Rates in Search Models with Initial Condition Problems," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(4), pages 780-799, October.
  • Handle: RePEc:red:issued:08-112 DOI: 10.1016/j.red.2009.10.012
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    References listed on IDEAS

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    1. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
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    3. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage Bargaining with On-the-Job Search: Theory and Evidence," Econometrica, Econometric Society, pages 323-364.
    4. Eckstein, Zvi & van den Berg, Gerard J., 2007. "Empirical labor search: A survey," Journal of Econometrics, Elsevier, vol. 136(2), pages 531-564, February.
    5. Audra J. Bowlus & Jean-Marc Robin, 2004. "Twenty Years of Rising Inequality in U.S. Lifetime Labour Income Values," Review of Economic Studies, Oxford University Press, pages 709-742.
    6. Gautier, Pieter A. & Teulings, Coen & van Vuuren, Aico, 2005. "On-The-Job Search and Sorting," IZA Discussion Papers 1687, Institute for the Study of Labor (IZA).
    7. Jolivet, Gregory & Postel-Vinay, Fabien & Robin, Jean-Marc, 2006. "The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US," European Economic Review, Elsevier, pages 877-907.
    8. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, pages 2295-2350.
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    Cited by:

    1. Tejada, Mauricio M., 2016. "Lifetime inequality measures for an emerging economy: The case of Chile," Labour Economics, Elsevier, vol. 42(C), pages 1-15.

    More about this item

    Keywords

    Record statistics; On-the-job search; Hazard models;

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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