Empirical Analysis of Individual Labor Market Prospects over the Business Cycle

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IZA Seminar

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

Date: 20.04.2004, 12:15 - 13:30


Presentation by 

Bas van der Klaauw (Vrije Universiteit Amsterdam)


In this paper we develop a structural model for the job search behavior of graduates. This model includes endogenous search effort and the possibility of on-the-job search. Using this model we are able to determine the optimal moment of starting job search, which generally precedes the date of graduation. Since individuals usually do not start a regular job before graduation, our model is non-stationary even in case all structural parameters are constant over time. Our model explains the common finding that a substantial share of individuals starts working immediately upon graduation and that these individual receive on average higher wages. We estimate the structural parameters using a unique data set of individuals who completed undergraduate education in the Netherlands between 1996 and 2001. In the estimation we take account of business cycle effect. We use our estimated model to compute the returns to early work experience.

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