Wage distributions and wage dynamics in Europe and the US : lessons from a simple job search model
Job search models of the labor market establish a very tight correspondance 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 wether this correspondance is present in the data by estimating a rudimentary partial equilibrium job search model on the ECHP database, from which we extract a 1996-1999 panel of individual worker data from 12 different European countries. We find that our basic job search model fits the data surprisingly well. This also allows us to point a number of interesting emprirical regularities about wage distributions. Finally, our results suggest that cross-sectional data on individual wages contain the basic information needed to obtain reliable estimates of the "search frictions" parameters of a canonical job search model.
|Date of creation:||Mar 2003|
|Contact details of provider:|| Postal: INRA-LEA, 48, Boulevard Jourdan, 75014 Paris, France|
Phone: 331 43136364
Fax: 331 43136362
Web page: http://www.inra.fr/Internet/Departements/ESR/UR/lea/index.html