Accounting for Endogenous Search Behavior in Matching Function Estimation

17 Pages Posted: 4 Jul 2011

See all articles by Daniel Borowczyk-Martins

Daniel Borowczyk-Martins

Copenhagen Business School

Grégory Jolivet

University of Bristol

Fabien Postel-Vinay

Centre for Economic Policy Research (CEPR); University of Bristol; IZA Institute of Labor Economics; Centre for Structural Econometrics (CSE)

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Abstract

We show that equilibrium matching models imply that standard estimates of the matching function elasticities are exposed to an endogeneity bias, which arises from the search behavior of agents on either side of the market. We offer an estimation method which, under certain assumptions, is immune from that bias. Application of our method to the estimation of a basic version of the matching function using aggregate U.S. data from the Job Openings and Labor Turnover Survey (JOLTS) suggests that the bias is quantitatively important.

Keywords: matching function estimation, unemployment, vacancies, job finding

JEL Classification: J63, J64

Suggested Citation

Borowczyk-Martins, Daniel and Jolivet, Grégory and Postel-Vinay, Fabien and Postel-Vinay, Fabien, Accounting for Endogenous Search Behavior in Matching Function Estimation. IZA Discussion Paper No. 5807, Available at SSRN: https://ssrn.com/abstract=1877620 or http://dx.doi.org/10.2139/ssrn.1877620

Daniel Borowczyk-Martins (Contact Author)

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Grégory Jolivet

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, Avon BS8 ITH
United Kingdom

Fabien Postel-Vinay

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, Avon BS8 ITH
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Structural Econometrics (CSE) ( email )

Department of Economics, University of Bristol
8 Woodland Road
Bristol, BS8 1TN
United Kingdom

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