Semi-Nonparametric Estimation of an Equilibrium Search Model
Oxford Bulletin of Economics & Statistics, Vol. 62, Issue 3
Posted: 22 Aug 2001
We specify and estimate an equilibrium job search model with productivity differences across labor market segments. The model allows for two types of unemployment: frictional unemployment due to search frictions and structural unemployment due to wage floors. Wage floors exist because of high unemployment benefits or binding minimum wages. The productivity distribution is estimated semi-nonparametrically along the lines of Gallant-Nychka, using Hermite series approximation. We decompose the total unemployment rate and we examine the effects of changes in the minimum wage.
Suggested Citation: Suggested Citation