Premium
Equilibrium Search Models and the Transition From School To Work
Author(s) -
Bowlus Audra J.,
Kiefer Nicholas M.,
Neumann George R.
Publication year - 2001
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/1468-2354.00112
Subject(s) - wage , differential (mechanical device) , work (physics) , transition (genetics) , economics , econometrics , demographic economics , labour economics , engineering , mechanical engineering , biochemistry , gene , aerospace engineering , chemistry
This paper applies the Burdett–Mortensen (1998) equilibrium search model to study the school to work transitions of U.S. high school graduates. We consider the case of discrete firm heterogeneity and provide a computational method to obtain the MLE. Our results show that unemployed blacks receive fewer offers than whites and employed blacks are more likely to lose their jobs. Importantly, employed blacks and whites receive job offers at the same rate. Assigning the whites' search parameters to the blacks and re‐solving reveals that 75 percent of the observed wage differential is explained by the job destruction rate differences.