Empircial labor search models: A survey

This paper surveys the existing empirical research that uses search theory to empirically analyze labor supply questions in a structural framework, using data on individual labor market transitions and durations, wages, and individual characteristics. The starting points of the literature are the Mincerian earnings function, Heckman’s classic selection model, and dynamic optimization theory. We develop a general framework for the labor market where the search for a job involves dynamic decision making under uncertainity. It can be specialized to be in agreement with most published research using labor search models. We discuss estimation, policy evaluation with the estimated model, equilibrium model versions, and the decomposition of wage variation into factors due to heterogeneity of various model determinants as well as search frictions themselves. We summarize the main empirical conclusions.Labor search models;

From Giving Birth to Paid Labor: The Effects of Adult Education for Prime-Aged Mothers

Women without work after childbirth are at risk of losing their connection to the labor market. However, they may participate in adult education programs. We analyze the effect of this on the duration to work and on the wage rate, by applying conditional difference-in-differences approaches. We use Swedish matched longitudinal register data sets covering the full population. The Swedish adult education program is unprecedented in its size, and enrollment is universally available at virtually no cost. We focus on low-skilled women who have recently given birth. We take account of program accessibility, selection issues, course heterogeneity, the income received during adult education, parental leave, and child care fees. To understand the enrollment decision from the mothers' point of view, we use the estimates to calibrate a job search model.evaluation of adult education, job search model, female labor supply, wages, participation, unemployment, schooling, conditional difference-in-differences

The Role of Marriage in the Causal Pathway from Economic Conditions Early in Life to Mortality

This paper analyzes the interplay between early-life conditions and marital status, as determinants of adult mortality. We use individual data from Dutch registers (years 1815-2000), combined with business cycle conditions in childhood as indicators of early-life conditions. The empirical analysis estimates bivariate duration models of marriage and mortality, allowing for unobserved heterogeneity and causal effects. Results show that conditions around birth and school ages are important for marriage and mortality. Men typically enjoy a protective effect of marriage on mortality, whereas women suffer during childbearing ages. Having been born under favorable economic conditions reduces female mortality during childbearing ages.death, longevity, recession, life expectancy, lifetimes, marital status, timing of events, selectivity, health

The effect of search frictions on wages

Labour market theories allowing for search frictions make marked predictions on the effect of the degree of frictions on wages. Often, the effect is predicted to be negative. Despite the popularity of these theories, this has never been tested. We perform tests with matched worker-firm data. The worker data are informative on individual wages and labour market transitions, and this allows for estimation of the degree of search frictions. The firm data are informative on labor productivity. The matched data provide the skill composition in different markets. Together this allows us to investigate how the mean difference between labor productivity and wages in a market depends on the degree of frictions and other determinants. We correct for worker self-selection into high-wage jobs. Using within-market variation, we also investigate the extent of (and explanations for) positive assortative matching.Labor market imperfections; job durations; productivity; heterogeneity; sorting; assortative matching

The Effect of Search Frictions on Wages

Labor market theories that allow for search frictions make marked predictions on the effect of the degree of frictions on wages. Often, the effect is predicted to be negative. Despite the popularity of these theories, this has never been tested. We perform tests with matched worker-firm data. We effectively compare different markets with different degrees of frictions and different market outcomes. The worker data are informative on individual wages and labor market transitions, and this allows for estimation of the degree of search frictions. The firm data are informative on labor productivity. The matched data allow for an assessment of the skill composition in different markets. Together this allows us to investigate how the mean difference between labor productivity and wages in a market depends on the degree of frictions and other determinants. Using within-market variation, we also investigate the extent of (and explanations for) positive assortative matching. We perform separate analyses for The Netherlands and Denmark.labor market imperfections, job durations, productivity, heterogeneity, sorting, assortative matching

Inference for shared-frailty survival models with left-truncated data

Shared-frailty survival models specify that systematic unobserved determinants of duration outcomes are identical within groups of individuals. We consider random-effects likelihood-based statistical inference if the duration data are subject to left-truncation. Such inference with left-truncated data can be performed in the Stata software package. We show that with left-truncated data, the commands ignore the weeding-out process before the left-truncation points, affecting the distribution of unobserved determinants among group members in the data, that is, among the group members who survive until their truncation points. We critically examine studies in the statistical literature on this issue as well as published empirical studies that use the commands. Simulations illustrate the size of the (asymptotic) bias and its dependence on the degree of truncation. We provide a Stata command file that maximizes the likelihood function that properly takes account of the interplay between truncation and dynamic.Stata; duration analysis; left-truncation; likelihood function; dynamic selection; hazard rate; unobserved heterogeneity; twin data

Monitoring Job Offer Decisions, Punishments, Exit to Work, and Job Quality

Unemployment insurance systems include monitoring of unemployed workers and punitive sanctions if job search requirements are violated. We analyze the effect of sanctions on the ensuing job quality, notably on wage rates and hours worked, and we examine how often a sanction leads to a lower occupational level. The data cover the Swedish population over 1999-2004. We estimate duration models dealing with selection on unobservables. We use weighted exogenous sampling maximum likelihood to deal with the fact the data register is large whereas observed punishments are rare. We also develop a theoretical job search model with monitoring of job offer rejection vis-a-vis monitoring of job search effort. The observation window includes a policy change in which the punishment severity was reduced. We find that the hourly wage and the number of hours are on average lower after a sanction, and that individuals move more often to a lower occupational level, incurring human capital losses. Monitoring offer rejections is less effective than monitoring search effort.offer rejection, unemployment, job offer, duration, sanction, wage, hours worked, weighted exogenous sampling maximum likelihood, case worker, search effort

Inference for Shared-Frailty Survival Models with Left-Truncated Data

Shared-frailty survival models specify that systematic unobserved determinants of duration outcomes are identical within groups of individuals. We consider random-effects likelihood-based statistical inference if the duration data are subject to left-truncation. Such inference with left-truncated data can be performed in the Stata software package. We show that with left-truncated data, the commands ignore the weeding-out process before the left-truncation points, affecting the distribution of unobserved determinants among group members in the data, that is, among the group members who survive until their truncation points. We critically examine studies in the statistical literature on this issue as well as published empirical studies that use the commands. Simulations illustrate the size of the (asymptotic) bias and its dependence on the degree of truncation. We provide a Stata command file that maximizes the likelihood function that properly takes account of the interplay between truncation and dynamic selection.unobserved heterogeneity, hazard rate, dynamic selection, likelihood function, left-truncation, duration analysis, stata, twin data

Duration dependence versus unobserved heterogeneity in treatment effects: Swedish labor market training and the transition rate to employment

The vocational employment training program is the most expensive training program in Sweden and a cornerstone of labor market policy. We analyze its causal effects on the individual transition rate from unemployment to employment by exploiting variation in the timing of treatment and outcome, dealing with selectivity on unobservables. We demonstrate the appropriateness of this approach in our context by studying the enrollment process. We develop a model allowing for duration dependence and unobserved heterogeneity (leading to spurious duration dependence) in the treatment effect itself, and we prove non-parametric identification. The data cover the population and include multiple unemployment spells for many individuals. The results indicate a large significantly positive effect on exit to work shortly after exiting the program. The effect at the inidividual level diminishes after some weeks. When taking account of the time spent in the program, the effect on the mean unemployment duration is small.Vocational training; progam evaluation; duration analysis; selectivity bias; dynamic treatments; active labor policy; identification

The role of marriage in the causal pathway from economic conditions early in life to mortality

This paper analyzes the interplay between early-life conditions and marital status, as determinants of adult mortality. We use individual data from Dutch registers (years 1815-2000), combined with business cycle conditions in childhood as indicators of earlylife conditions. The empirical analysis estimates bivariate duration models of marriage and mortality, allowing for unobserved heterogeneity and causal effects. Results show that conditions around birth and school ages are important for marriage and mortality. Men typically enjoy a protective effect of marriage on mortality, whereas women suffer during childbearing ages. Having been born under favorable economic conditions reduces female mortality during childbearing ages.Death; longevity; recession; life expectancy; lifetimes; marital status; timing of events; selectivity; health