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

University of Aarhus CLS Working Paper No. 98-007

56 Pages Posted: 25 Aug 1999

See all articles by Christian Bontemps

Christian Bontemps

Toulouse School of Economics

Jean-Marc Robin

École Normale Supérieure (ENS) - Laboratoire d'Economie Theorique et Appliquee (LEA); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); French National Institute for Agricultural Research (INRA); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Gerard J. van den Berg

VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

Date Written: August 1998

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.

JEL Classification: J6, J3, D83, C51

Suggested Citation

Bontemps, Christian and Robin, Jean-Marc and van den Berg, Gerard J., Equilibrium Search with Continuous Productivity Dispersion: Theory and Non-Parametric Estimation (August 1998). University of Aarhus CLS Working Paper No. 98-007. Available at SSRN: https://ssrn.com/abstract=176075 or http://dx.doi.org/10.2139/ssrn.176075

Christian Bontemps

Toulouse School of Economics

21 allee de Brienne
Toulouse, 31000
France

Jean-Marc Robin

École Normale Supérieure (ENS) - Laboratoire d'Economie Theorique et Appliquee (LEA) ( email )

48 boulevard Jourdan
75014 Paris
France
+33 1 4313 6365 (Phone)
+33 1 4313 6362 (Fax)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

French National Institute for Agricultural Research (INRA)

147, rue de l'Universite
Paris Cedex 07, 78-Yvelines 75338
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

Gerard J. Van den Berg (Contact Author)

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6132 (Phone)
+32 20 444 6020 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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