Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/149484
Authors: 
Gottfries, Axel
Teulings, Coen
Year of Publication: 
2016
Series/Report no.: 
Tinbergen Institute Discussion Paper 16-080/VI
Abstract: 
A wide class of models with On-the-Job Search (OJS) predicts that workers gradually select into better-paying jobs, until lay-off occurs, when this selection process starts over from scratch. We develop a simple methodology to test these predictions. Our inference uses two sources of identification to distinguish between returns to experience and the gains from OJS: (i) time-variation in job-finding rates and (ii)the time since the last lay-off. Conditional on the termination date of the job, job duration should be distributed uniformly. Using extreme value theory, we can infer the shape of the wage-offer distribution from the effect of the time since the last lay-off on wages. This methodology is applied to the NLSY 79. We find remarkably strong support for all implications. The offer distribution is Gumbel, which has an unbounded support, which is inconsistent with pure sorting models. The standard deviation of wage offers is 7 to 15% (depending on educational level and urbanisation). OJS accounts for 30% of the experience profile and 9% of total wage dispersion. The average wage loss after lay-off is 11%.
Subjects: 
On-the-job search
Wage dispersion
Job duration
JEL: 
J31
J63
J64
Document Type: 
Working Paper

Files in This Item:
File
Size
603.01 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.