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Accounting For Endogenous Search Behavior in Matching Function Estimation

  • Borowczyk-Martins, Daniel
  • Jolivet, Grégory
  • Postel-Vinay, Fabien

We show that equilibrium matching models imply that standard estimates of the matching function elasticities are exposed to an endogeneity bias, which arises from the search behavior of agents on either side of the market. We offer an estimation method which, under certain assumptions, is immune from that bias. Application of our method to the estimation of a basic version of the matching function using aggregate U.S. data from the Job Openings and Labor Turnover Survey (JOLTS) suggests that the bias is quantitatively important.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8471.

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Date of creation: Jul 2011
Date of revision:
Handle: RePEc:cpr:ceprdp:8471
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  1. Regis Barnichon & Andrew Figura, 2011. "What drives matching efficiency? a tale of composition and dispersion," Finance and Economics Discussion Series 2011-10, Board of Governors of the Federal Reserve System (U.S.).
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  13. Coles, Melvyn G & Petrongolo, Barbara, 2002. "A Test Between Unemployment Theories Using Matching Data," CEPR Discussion Papers 3241, C.E.P.R. Discussion Papers.
  14. Fahr, René & Sunde, Uwe, 2005. "Job and vacancy competition in empirical matching functions," Munich Reprints in Economics 20487, University of Munich, Department of Economics.
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  18. Hsiao, Cheng, 1997. "Statistical Properties of the Two-Stage Least Squares Estimator under Cointegration," Review of Economic Studies, Wiley Blackwell, vol. 64(3), pages 385-98, July.
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