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The Empirical Content of the Job Search Model: Labor Mobility and Wage Distributions in Europe and the U.S

Author

Listed:
  • Grégory Jolivet
  • Fabien Postel-Vinay

    (Department of Economics - University of Bristol [Bristol])

  • Jean-Marc Robin

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

Job search models of the labor market hypothesize a very tight correspondence between the determinants of labor turnover and individual wage dynamics on one hand, and the determinants of wage dispersion on the other. This paper offers a systematic examination of whether this correspondence is present in the data by estimating a rudimentary partial equilibrium job search model on a 3-year panel of individual worker data covering 10 European countries and the U.S. We find that our basic job search model fits the data surprisingly well. This also allows us to point at a number of interesting empirical regularities about wage distributions. Our results suggest that cross-sectional data on individual wages contain the basic information needed to obtain a reliable measure of the "magnitude of labor market frictions", as measured by a parameter of the canonical job search model. Finally, we use our results in a cross-country comparison of the intensity and nature of job-to-job turnover. We arrange countries into two different groups according to their turnover intensity. We further show that the nature of job-to-job turnover is very different between those two groups: Turnover is predominantly voluntary in low-turnover countries, whereas it is to a large extent involuntary in high-turnover countries.
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Suggested Citation

  • Grégory Jolivet & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "The Empirical Content of the Job Search Model: Labor Mobility and Wage Distributions in Europe and the U.S," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00308803, HAL.
    • Handle: RePEc:hal:cesptp:hal-00308803
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    as
    1. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "The Distribution of Earnings in an Equilibrium Search Model with State-Dependent Offers and Counteroffers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 989-1016, November.
    2. StÈphane Bonhomme & GrÈgory Jolivet, 2009. "The pervasive absence of compensating differentials," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(5), pages 763-795.
    3. Robert E. Hall, 2006. "Job Loss, Job Finding and Unemployment in the US Economy over the Past Fifty Years," NBER Chapters, in: NBER Macroeconomics Annual 2005, Volume 20, pages 101-166, National Bureau of Economic Research, Inc.
    4. Bontemps, Christian & Robin, Jean-Marc & van den Berg, Gerard J, 2000. "Equilibrium Search with Continuous Productivity Dispersion: Theory and Nonparametric Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 305-358, May.
    5. Ken Burdett & Melvyn Coles, 2003. "Equilibrium Wage-Tenure Contracts," Econometrica, Econometric Society, vol. 71(5), pages 1377-1404, September.
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    7. Gilles Postel-Vinay & Jean-Marc Robin, 2002. "The distribution of earnings in an equilibrium search model with state-dependent offers and counteroffers," Post-Print hal-03416837, HAL.
    8. Coles, Melvyn G. & Petrongolo, Barbara, 2002. "A test between unemployment theories using matching data," LSE Research Online Documents on Economics 5329, London School of Economics and Political Science, LSE Library.
    9. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, vol. 70(6), pages 2295-2350, November.
    10. Bent Jesper Christensen & Rasmus Lentz & Dale T. Mortensen & George R. Neumann & Axel Werwatz, 2005. "On-the-Job Search and the Wage Distribution," Journal of Labor Economics, University of Chicago Press, vol. 23(1), pages 31-58, January.
    11. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Post-Print hal-03458567, HAL.
    12. Margaret Stevens, 2004. "Wage-Tenure Contracts in a Frictional Labour Market: Firms' Strategies for Recruitment and Retention," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 535-551.
    13. Gerard J. van den Berg, 1990. "Nonstationarity in Job Search Theory," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 255-277.
    14. Fabien Postel-Vinay & Jean-Marc Robin, 2004. "To Match or Not to Match? Optimal Wage Policy With Endogenous Worker Search Intensity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(2), pages 297-330, April.
    15. 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.
    16. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627, Elsevier.
    17. Geert Ridder & Gerard J. van den Berg, 2003. "Measuring Labor Market Frictions: A Cross-Country Comparison," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 224-244, March.
    18. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium wage dispersion with worker and employer heterogeneity," Post-Print hal-03587660, HAL.
    19. Hwang, Hae-shin & Mortensen, Dale T & Reed, W Robert, 1998. "Hedonic Wages and Labor Market Search," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 815-847, October.
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