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Equilibrium Search with Continuous Productivity Dispersion: Theory and Non-Parametric Estimation

Author

Listed:
  • Christian Bontemps

    (CREST-INSEE, Paris)

  • Jean-Marc Robin

    (INRA-CORELA and CREST-INSEE, Paris)

  • Gerard J. van den Berg

    (Vrije Universiteit Amsterdam)

Abstract

In this paper we theoretically and empirically analyze equilibrium search models of the labor market. The Burdett-Mortensen equilibrium search model is generalized by allowing for continuous distributions of firm productivity types within a given labor market. We characterize equilibrium and derive expressions for the endogenous equilibrium wage distributions. We then characterize the full set of wage (offer) distributions that can in principle be generated by the model. We develop a structural nonparametric estimation method for the productivity distribution. We estimate the model using French longitudinal survey data on labor supply, and we compare the results on the relation between productivities and wages to those obtained using a French panel dataset of firms. The results are informative on the degree to which firms exploit search frictions.

Suggested Citation

  • Christian Bontemps & Jean-Marc Robin & Gerard J. van den Berg, 1997. "Equilibrium Search with Continuous Productivity Dispersion: Theory and Non-Parametric Estimation," Tinbergen Institute Discussion Papers 97-081/3, Tinbergen Institute, revised 01 Aug 1998.
    • Handle: RePEc:tin:wpaper:19970081
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    Keywords

    Labor market equilibrium; job mobility; wages; productivity; monopsony power;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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