How Large are Search Frictions?

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IZA Seminar

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

Date: 08.10.2002, 12:15 - 13:30


Presentation by 

Coen Teulings (University of Cambridge)


This paper presents strong evidence for the concavity of wages in job and worker characteristics by adding second order terms to a Mincerian earnings function. Under a standard normality assumption, this concavity cannot be attributed to unobserved components in either of these characteristics. A search model provides a parsimonious explanation for our findings. This model yields two restrictions on the coe.cients which fit the data very well. Search frictions have a large impact on wages. Our results relate to the literatures on industry wage di.erentials, on structural identification in hedonic models, and on wage posting versus Nash bargaining in search models.

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