Working Paper

Estimating models of on-the-job search using record statistics

Abstract: This paper proposes a methodology for estimating job search models that does not require either functional form assumptions or ruling out the presence of unobserved variation in worker ability. In particular, building on existing results from record- value theory, a branch of statistics that deals with the timing and magnitude of extreme values in sequences of random variables, I show how we can use wage data to identify the distribution from which workers search. Applying this insight to wage data in the NLSY dataset, I show that the data supports the hypothesis that the wage oer distribution is Pareto, but not that it is lognormal.

Keywords: Employment (Economic theory);

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Working Paper Series

Publication Date: 2003

Number: WP-03-18