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Non-Stationary Job Search with Firing: a Structural Estimation

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  • Garcia-Perez, J.I.

Abstract

This paper modifies Van den Berg's (1990) nonstationary model of search, considering the existence of a firing probability. The presence of firing makes unemployed workers lower their reservation wage because of the entitlement effect embodied in accepting a job offer. In this nonstationary environment, reservation wages have a stronger time-dependence than without firing. The model is estimated structurally using Spanish data for the period 1985-1996. The main finding from this estimation is that, although the decrease in reservation wages is the main determinant of the change in the hazard rate for the first four months, later on, the only effect comes from the job offer arrival rate, given that acceptance probabilities are roughly equal to one. These results are obtained with grouped duration and re-employment wage data, and controlling for the presence of unobserved heterogeneity in the offer arrival rate.

Suggested Citation

  • Garcia-Perez, J.I., 1998. "Non-Stationary Job Search with Firing: a Structural Estimation," Papers 9802, Centro de Estudios Monetarios Y Financieros-.
  • Handle: RePEc:fth:cemfdt:9802
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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.
    2. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366, Decembrie.
    3. Jenkins, Stephen P, 1995. "Easy Estimation Methods for Discrete-Time Duration Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 129-138, February.
    4. Miller, Robert A, 1984. "Job Matching and Occupational Choice," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1086-1120, December.
    5. Gerard J. van den Berg, 1990. "Nonstationarity in Job Search Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(2), pages 255-277.
    6. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
    7. Usategui, JoseM., 1993. "Finite duration of unemployment insurance, reservation wages and participation in the job market," Journal of Public Economics, Elsevier, vol. 50(3), pages 407-427, March.
    8. Narendranathan, Wiji & Nickell, Stephen, 1985. "Modelling the process of job search," Journal of Econometrics, Elsevier, vol. 28(1), pages 29-49, April.
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    Citations

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    Cited by:

    1. José Ignacio García Pérez, 2003. "Non-stationary Job Search When Jobs Do Not Last Forever: A Structural Estimation to Evaluate Alternative Unemployment Insurance Systems," Economic Working Papers at Centro de Estudios Andaluces E2003/49, Centro de Estudios Andaluces.
    2. Garcia Perez, Jose Ignacio & Rebollo Sanz, Yolanda, 2005. "Wage changes through job mobility in Europe: A multinomial endogenous switching approach," Labour Economics, Elsevier, vol. 12(4), pages 531-555, August.
    3. Namkee Ahn & José Ignacio García-Pérez, 2002. "Unemployment duration and workers' wage aspirations in Spain," Spanish Economic Review, Springer;Spanish Economic Association, vol. 4(2), pages 103-118.
    4. Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460, Elsevier.
    5. repec:diw:diwwpp:dp216 is not listed on IDEAS
    6. Stephen P. Jenkins & Carlos García-Serrano, 2000. "Re-employment Probabilities for Spanish Men: What Role Does the Unemployment Benefit System Play?," Discussion Papers of DIW Berlin 216, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    JOB SEARCHING ; UNEMPLOYMENT ; LABOUR MARKET ; STATISTICAL ANALYSIS;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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