Equilibrium Search Models and the Transition from School to Work

43 Pages Posted: 28 Jul 1997

See all articles by Audra J. Bowlus

Audra J. Bowlus

University of Western Ontario - Department of Economics

Nicholas M. Kiefer

Cornell University

George R. Neumann

University of Iowa - Henry B. Tippie College of Business - Department of Economics

Date Written: June 4, 1997

Abstract

This paper applies an equilibrium search to study the transition from schooling to work of U.S. high school graduates. We consider the case where there is heterogeneity in firm productivity and the number of firm types is discrete. For this case the estimation problem is non-standard, and the likelihood function is non-differentiable. This paper provides a computational method to obtain the MLE and, through several Monte Carlo studies, characterizes the behavior of the estimator. Applying these methods to the transition from school to work, our results show that non-employed blacks receive fewer offers than whites and employed blacks are more likely to lose their jobs. Importantly, employed blacks and whites receive job offers at the same rate. However, the difference in job destruction rates is so great that it accounts for three-quarters of the black-white wage differential.

JEL Classification: J64, J3, C41

Suggested Citation

Bowlus, Audra J. and Kiefer, Nicholas M. and Neumann, George R., Equilibrium Search Models and the Transition from School to Work (June 4, 1997). Available at SSRN: https://ssrn.com/abstract=40040 or http://dx.doi.org/10.2139/ssrn.40040

Audra J. Bowlus

University of Western Ontario - Department of Economics ( email )

London, Ontario N6A 5B8
Canada
(519) 661-2111 ext. 85359 (Phone)
(519) 661-3666 (Fax)

Nicholas M. Kiefer

Cornell University ( email )

Building 350
Ithaca, NY 14853
United States
607-255-6315 (Phone)
607-539-6366 (Fax)

George R. Neumann (Contact Author)

University of Iowa - Henry B. Tippie College of Business - Department of Economics ( email )

108 Pappajohn Building
Iowa City, IA 52242
United States
319-335-0850 (Phone)
319-356-1956 (Fax)

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