Evaluating Search and Matching Models Using Experimental Data

47 Pages Posted: 26 Aug 2005

See all articles by Jeremy Lise

Jeremy Lise

University College London

Shannon Seitz

Queen's University - Department of Economics

Jeffrey A. Smith

University of Wisconsin - Madison; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Date Written: August 2005

Abstract

This paper introduces an innovative test of search and matching models using the exogenous variation available in experimental data. We take an off-the-shelf Pissarides matching model and calibrate it to data on the control group from a randomized social experiment. We then simulate a program group from a randomized experiment within the model. As a measure of the performance of the model, we compare the outcomes of the program groups from the model and from the randomized experiment. We illustrate our methodology using the Canadian Self-Sufficiency Project (SSP), a social experiment providing a time limited earnings supplement for Income Assistance recipients who obtain full time employment within a 12 month period. We find two features of the model are consistent with the experimental results: endogenous search intensity and exogenous job destruction. We find mixed evidence in support of the assumption of fixed hours of labor supply. Finally, we find a constant job destruction rate is not consistent with the experimental data in this context.

Keywords: calibration, equilibrium search and matching models, policy experiments, Self-Sufficiency Project, welfare, social experiments

JEL Classification: J2, I38, J6

Suggested Citation

Lise, Jeremy and Seitz, Shannon and Smith, Jeffrey Andrew, Evaluating Search and Matching Models Using Experimental Data (August 2005). IZA Discussion Paper No. 1717, Available at SSRN: https://ssrn.com/abstract=789464 or http://dx.doi.org/10.2139/ssrn.789464

Jeremy Lise

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Shannon Seitz

Queen's University - Department of Economics ( email )

99 University Avenue
Kingston K7L 3N6, Ontario
Canada

Jeffrey Andrew Smith (Contact Author)

University of Wisconsin - Madison

716 Langdon Street
Madison, WI 53706-1481
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA)

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Bonn, D-53072
Germany

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