Household Search or Individual Search: Does It Matter? Evidence from Lifetime Inequality Estimates. Preliminary and Incomplete

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 19.04.2011, 12:15 - 13:30


Presentation by 

Luca Flabbi (University of North Carolina, Chapel Hill)


We develop and estimate an household search model to evaluate if ignoring that labor market decisions are taken at the household level - as usually done in search models of the labor market - has relevant empirical consequences. We evaluate the impact of this mispecification error by simulating labor market careers to compute lifetime measures of inequality. We find that ignoring the household leads to estimate gender differentials in average wage offers for full-time jobs three times larger and gender differentials in lifetime earnings inequality two and a half times larger. We think that these preliminary results clearly show that in many applications it may be costly to ignore that labor market search decisions are taken at the household level.

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