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Evaluating Search and Matching Models Using Experimental Data

Listed author(s):
  • Jeremy Lise

    ()

    (Queen's University)

  • Shannon Seitz

    ()

    (Queen's University)

  • Jeffrey Smith

    ()

    (University of Michigan)

This paper introduces an innovative test of search and matching models using the exogenous variation available in experimental data. We take an off-the-shelf Pissarides matching model and calibrate it to data on the control group from a randomized social experiment. We then simulate a program group from a randomized experiment within the model. As a measure of the performance of the model, we compare the outcomes of the program groups from the model and from the randomized experiment. We illustrate our methodology using the Canadian Self-Sufficiency Project (SSP), a social experiment providing a time limited earnings supplement for Income Assistance recipients who obtain full time employment within a 12 month period. We find two features of the model are consistent with the experimental results: endogenous search intensity and exogenous job destruction. We find mixed evidence in support of the assumption of fixed hours of labor supply. Finally, we find a constant job destruction rate is not consistent with the experimental data in this context.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1074.pdf
File Function: First version 2006
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Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1074.

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Length: 46 pages
Date of creation: May 2006
Handle: RePEc:qed:wpaper:1074
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