Working Paper: NBER ID: w30655
Authors: Peter Arcidiacono; Attila Gyetvai; Arnaud Maurel; Ekaterina S. Jardim
Abstract: This paper applies some of the key insights of dynamic discrete choice models to continuous-time job search models. We propose a novel framework that incorporates preference shocks into search models, resulting in a tight connection between value functions and conditional choice probabilities. Including preference shocks allows us to establish constructive identification of all the model parameters. Our method also makes it possible to estimate rich nonstationary job search models in a simple and tractable way, without having to solve any differential equations. We apply our framework to rich longitudinal data from Hungarian administrative records, allowing for nonstationarities in offer arrival rates, wage offers, and in the flow payoff of unemployment. Longer unemployment durations are associated with substantially worse wage offers and lower offer arrival rates, which results in accepted wages falling over time.
Keywords: No keywords provided
JEL Codes: C59; J62; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| longer unemployment duration (J64) | worse wage offers (J31) |
| longer unemployment duration (J64) | lower offer arrival rates (R49) |
| lower offer arrival rates (R49) | accepted wages fall over time (J31) |
| worse wage offers (J31) | accepted wages fall over time (J31) |
| longer unemployment duration (J64) | less selective job acceptance (J79) |
| less selective job acceptance (J79) | accepted wages fall over time (J31) |
| preference shocks (D11) | identification of job search models (J64) |