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Equilibrium search with continuous productivity dispersion: Theory and nonparametric estimation

Research output: Contribution to journalArticle

Original languageEnglish
Pages (from-to)305-358
Number of pages54
JournalInternational Economic Review
Volume41
Issue number2
DatePublished - May 2000

Abstract

In this article we develop an equilibrium search model with a continuous distribution of firm productivity types within a given labor market. We characterize equilibrium, derive expressions for the endogenous equilibrium wage distributions, and characterize the set of wage distributions that can 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 with those from a French panel data set of firms. The results are informative on the degree to which firms exploit search frictions.

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