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http://hdl.handle.net/10419/33613
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| Title: | | Search equilibrium, production parameters and social returns to education: theory and estimation  |
| Authors: | | Holzner, Christian Launov, Andrey |
| Issue Date: | | 2005 |
| Series/Report no.: | | IZA Discussion Papers 1904 |
| Abstract: | | We introduce different skill groups and production functions into the Burdett-Mortensen equilibrium search model. Supermodularity in the production process leads to a positive intrafirm wage correlation between skill groups. Theory implies that increasing returns to scale can lead to a unimodal earnings density with a decreasing right tail even in the absence of productivity dispersion. Our empirical results indicate economy-wide increasing returns to scale. We use the structural estimates of the production parameters to investigate whether private returns to education equal social returns. Our estimates suggest a positive welfare effect from increasing the share of medium-skilled agents in the workforce. |
| Subjects: | | search wage correlation social returns to education |
| JEL: | | J21 J23 J64 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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