Abstract

http://ssrn.com/abstract=392035
 
 

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How Large are Search Frictions?


Pieter A. Gautier


Free University of Amsterdam; Tinbergen Institute Amsterdam (TIA); Institute for the Study of Labor (IZA)

Coen N. Teulings


University of Cambridge; University of Amsterdam - SEO Economic Research; Tinbergen Institute; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Institute for the Study of Labor (IZA)

March 12, 2003

Tinbergen Institute Discussion Paper No. 03-026/3

Abstract:     
This paper presents strong evidence for the concavity of wages in job and worker characteristics by adding second order terms to a Mincerian earnings function for 6 OECD countries. Under a standard normality assumption, this concavity cannot be attributed to unobserved components in those characteristics. An assignment model with search frictions provides a parsimonious explanation for our findings. This model yields two restrictions on the coefficients which fit the data very well. The impact of search frictions on wages is large. Our results relate to the literature on industry wage differentials, on structural identification in hedonic models, and on wage posting versus Nash bargaining in search models.

Number of Pages in PDF File: 36

Keywords: wages, search, assignment

JEL Classification: J210, J300, J600, J230

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Date posted: June 9, 2003  

Suggested Citation

Gautier, Pieter A. and Teulings, Coen N., How Large are Search Frictions? (March 12, 2003). Tinbergen Institute Discussion Paper No. 03-026/3. Available at SSRN: http://ssrn.com/abstract=392035 or http://dx.doi.org/10.2139/ssrn.392035

Contact Information

Pieter A. Gautier (Contact Author)
Free University of Amsterdam ( email )
Amsterdam, ND North Holland
Netherlands
Tinbergen Institute Amsterdam (TIA) ( email )
Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Coen N. Teulings
University of Cambridge ( email )
King's Parade
Cambridge, CB3 0DS
United Kingdom
University of Amsterdam - SEO Economic Research ( email )
Roetersstraat 29
Amsterdam, 1018 WB
Netherlands
+31 20 525 1634 (Phone)
+31 20 525 1606 (Fax)
Tinbergen Institute
Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.CESifo.de
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
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