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Estimation of equilibrium wage distributions with heterogeneity

1995; Wiley; Volume: 10; Issue: S1 Linguagem: Inglês

10.1002/jae.3950100507

1099-1255

Audra J. Bowlus, Nicholas M. Kiefer, George R. Neumann,

Mathematical Dynamics and Fractals

Journal of Applied EconometricsVolume 10, Issue S1 p. S119-S131 Article Estimation of equilibrium wage distributions with heterogeneity Audra J. Bowlus, Audra J. Bowlus Department of Economics, University of Western Ontario, London, Ontario, Canada N6A 5C2Search for more papers by this authorNicholas M. Kiefer, Nicholas M. Kiefer CLS, Aarhus, Department of Economics, Aarhus Universitet, and Department of Economics, Cornell University, Ithaca, NY 14853, USASearch for more papers by this authorGeorge R. Neumann, George R. Neumann Department of Economics, University of Iowa, Iowa City, Iowa 52242, USASearch for more papers by this author Audra J. Bowlus, Audra J. Bowlus Department of Economics, University of Western Ontario, London, Ontario, Canada N6A 5C2Search for more papers by this authorNicholas M. Kiefer, Nicholas M. Kiefer CLS, Aarhus, Department of Economics, Aarhus Universitet, and Department of Economics, Cornell University, Ithaca, NY 14853, USASearch for more papers by this authorGeorge R. Neumann, George R. Neumann Department of Economics, University of Iowa, Iowa City, Iowa 52242, USASearch for more papers by this author First published: December 1995 https://doi.org/10.1002/jae.3950100507Citations: 54AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat Abstract Equilibrium search models generalize the one-sided models used earlier by endogenizing the wage offer distribution. Attempts to estimate versions of these equilibrium n search models have been unsuccessful, ironically because the predicted wage distribution did not fit the wage data. In this paper we extend the applicability of search models by introducing firm heterogeneity to account for the shape of the wage density. The resulting estimation problem is difficult, but we propose a solution and illustrate its feasibility and performance with a Monte Carlo study and an application to US labour market data. References Albrecht, J. W. and B. Axell (1984) ‘An equilibrium model of search unemployment’, Journal of Political Economy, 92, 824–40. Burdett, K. (1990), Search models: a survey,' University of Essex Discussion Paper. Burdett, K., and D. T. Mortensen (1989), ‘ Equilibrium wage differentials: compensating and otherwise,’ Northwestern University mimeo. Chernoff, H. and H. Rubin (1956), ‘ The estimation of the location of a discontinuity in density’, Proceedings of the Third Berkeley Symposium on Mathematia al Statistics and Probability, University of California Press, Berkeley, 1, 19–37. Christensen, B. J. and N. M. Kiefer (1994), ‘ Local cuts and separate inference’, Scandinavian Journal of Statistics. Devine, T. J. and N. M. Kiefer (1991), Empirical Labor Economics: The Search Approach, Oxford University Press, Oxford. Eckstein, Z. and K. I. Wolpin (1990), ‘Estimating a market equilibrium search model from panel data on individuals’, Econometrica, 58, 783–808. Kiefer, N. M. and G. R. Neumann (1991) ‘Notes On monopsony models’, mimeo, Princeton University. Kiefer, N. M. and G. R. Neumann (1994) ‘ Wage dispersion with homogeneity: the empirical equilibrium search model,’ in N. C. Westergard-Nielsen and P. Jensen, (eds), Proceedings of the Third Symposium On Panel Data and Labour Market Dynamics, North-Holland, New York 57–74. Kirkpatrick, S., C. D. Gelatt, Jr and M. P. Vecchi (1983) ‘Optimization by simulated annealing’, Science, 220, 671–80. McCall, J. J., (1970) ‘The economics of information and job search’, Quarterly Journal of Economics, 84, 1, 113–26. Mortensen, D. T. (1970), ‘Job search, the duration of unemployment, and the Phillips curve’, American Economic Review, 60, 5, 505–17. Mortensen, D. T. (1990) ‘Equiiibrium wage distributions: a synthesis’, in J. Hartog, G. Ridder, and J. Theeuwes, (eds), Panel Data and Labor Market Studies, North-Holland, New York, 279–96. Otten, R. and L. van Tinneken (1989), The Annealing Algorithm, Kluwer, Boston. Rubin, H. (1960), ‘ The estimation of discontinuities in multivariate densities, and related problems in stochastic processes’, Proceedings of the Fourth Berkeley Symposium on Mathematical Statistics and Probability, University of California Press, Berkeley, 563–74. Szu, H. and R. Hartley (1987) ‘Fast simulated annealing’, Physics Letters, A, 12, 157–62. Van den Berg, G. J. and G. Ridder (1993) ‘On the estimation of equilibrium search models from panel data’, in J. C. Van Ours, G. A. Pfann, and G. Ridder, (eds), Labor Demand and Equilibrium Wage Formation, North-Holland, New York, 227–45. Van den Berg, A. J. and G. R. Ridder (1994) ‘ Estimating equilibrium search models from wage data’, in N. C. Westergard-Nielsen and P. Jensen, (eds), Proceedings of the Third Symposium On Panel Data and Labour Market Dynamics, North-Holland, New York, 43–55. Citing Literature Volume10, IssueS1Supplement: Special Issue on the Microeconometrics of Dynamic Decision MakingDecember 1995Pages S119-S131 ReferencesRelatedInformation