Estimation of a Roy/Search/Compensating Differential Model of the Labor Market

Taber, Christopher; Vejlin, Rune

doi:10.3386/w22439

Cited by 14 publications

(9 citation statements)

References 36 publications

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“…Several papers have estimated equilibrium models and used them to decompose pay differences in labor markets. Some papers use worker employment data in an equilibrium framework (Altug and Miller (1998), Lee and Wolpin (2006), ), whereas others, like ours, use matched firmmanager data, which allow the incorporation of firm and worker heterogeneity (Postel-Vinay and Robin (2002), Cahuc, Postel-Vinay, and Robin (2006), Taber and Vejlin (2010)). Of these, only motivated turnover and wages with information asymmetries between workers and firms, but they did not use data on firms.…”

Section: Related Literaturementioning

confidence: 99%

Promotion, Turnover, and Compensation in the Executive Labor Market

2015

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IN OUR STRUCTURAL ESTIMATION, we assume throughout that ε t is distributed as a Type 1 extreme value. The computational advantages of parameterizing G(ε) this way are most evident from Lemma A.1 below, where we provide formulas for A t (h) and B t (h), the value of human capital on and off the equilibrium path, and also an expression for marginal disturbances, q jk [p t (h)]. LEMMA A.1: If ε jkt is independently and identically distributed as a Type I extreme value with location and scale parameterswhere p 0t (h) is the probability that the optimal choice is retirement,The IIA property of Type 1 extreme values implies that the marginal idiosyncratic shock for a manager who is indifferent between the best job match (j k) and retiring is the log-odds ratio of the probability that a manager with characteristics (t h) who accepts employment in (j k) versus retiring. The logodds ratio does not depend on the other components of the conditional-choice probability vector. The greater the probability of retirement observed in equilibrium, the less important is the human-capital component, and the higher is the unobserved shock for the marginal person.PROOF OF LEMMA A.1: The formula for q jk [p t (h)] given by (S-1) is well known (e.g., Hotz and Miller (1993)). Denoting the probability density function of ε * jkt ≡ d jk ε jkt by dG(ε * jkt ), we first derive an expression for E[exp(−ε * jkt /b t )] and then use it in our derivation of the formula for A t (h t ):

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Section: Related Literaturementioning

confidence: 99%

Promotion, Turnover, and Compensation in the Executive Labor Market

2015

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“…28 When considering identification, note that formal sector rationing can be interpreted as a search friction from the worker's perspective. Taber and Vejlin (2013) establish nonparametric identification in a dynamic labor supply model that incorporates nonpecuniary benefits, comparative advantage, human capital, and search frictions. 29 Heuristically, life-cycle patterns in informal sector participation are key to identifying formal sector rationing: Low rationing implies that the fraction of workers employed in the higher-paying formal sector should increase relatively quickly over the life cycle.…”

Section: Model Discussion and Parameter Identificationmentioning

confidence: 99%

Pension Design with a Large Informal Labor Market: Evidence from Chile

Joubert

2014

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. This paper investigates empirically the fiscal and welfare trade-offs involved in designing a pension system when workers can avoid participation by working informally. A dynamic behavioral model captures a household's labor supply, formal/informal sector choice and saving decisions under the rules of Chile's canonical privatized pension system. The parameters governing household preferences and earnings opportunities in the formal and the informal sector are jointly estimated using a longitudinal survey linked with administrative data from the pension system's regulatory agency. The parameter estimates imply that formal jobs rationing is limited and that mandatory pension contributions play an sizeable role in encouraging informality. Our policy experiments show that Chile could achieve a reduction of 23% of minimum pension costs, while guaranteeing the same level of income in retirement, by increasing the rate at which the benefits taper off.JEL Classification: J24, J26, E21, E26, O17

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“…To make the analysis tractable, I consider that (1) firms post a skill price

θ_{O}^{italiced}

for each skill group

italiced

subject to the constraint that health

h_{t}

cannot be priced, which determines wage, and (2) they decide whether to offer ESHI to all of their workforce

O \in false{0, 1 false}

. The assumption of skill price posting follows the literature of empirical search models with worker heterogeneity (e.g., Barlevy (), Bagger et al (), and Taber and Vejlin ()), which discuss its empirical plausibility , . The assumption that firms cannot condition on individual health is made either because worker health status is not observed by firms or because many labor regulations limit firm's ability to condition on hiring, firing, and compensation based on an individual's health status , , .…”

Section: Modelmentioning

confidence: 99%

“…The assumption of skill price posting follows the literature of empirical search models with worker heterogeneity (e.g., Barlevy (2008), Bagger et al (2014), and Taber and Vejlin (2016)), which discuss its empirical plausibility. 18,19 The assumption that firms cannot 18 An interesting extension is to allow firms to offer an optimal screening contract (i.e., a menu of wage and ESHI combinations).…”

Section: Individual Labor Productivitymentioning

confidence: 99%

Labor market sorting and health insurance system design

Aizawa

2019

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This paper develops and estimates a life‐cycle equilibrium labor search model in which heterogeneous firms determine health insurance provisions and heterogeneous workers sort themselves into jobs with different compensation packages over the life cycle. I study the optimal joint design of major policies in the Affordable Care Act (ACA) and the implications of targeting these policies to certain individuals. Compared with the health insurance system under the ACA, the optimal structure lowers the tax benefit of employer‐sponsored health insurance and makes individual insurance more attractive to younger workers. Through changes in firms' insurance provisions, a greater number of younger workers sort into individual markets, which contributes to improving the risk pool in individual insurance and lowering the uninsured risk.

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Estimation of a Roy/Search/Compensating Differential Model of the Labor Market

Cited by 14 publications

References 36 publications

Promotion, Turnover, and Compensation in the Executive Labor Market

Promotion, Turnover, and Compensation in the Executive Labor Market

Pension Design with a Large Informal Labor Market: Evidence from Chile

Labor market sorting and health insurance system design

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