Journal Article

Identification of Search Models using Record Statistics

Gadi Barlevy

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 75, issue 1, pages 29-64
Published in print January 2008 | ISSN: 0034-6527
Published online January 2008 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2007.00459.x
Identification of Search Models using Record Statistics

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  • Information, Knowledge, and Uncertainy
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This paper shows how record-value theory, a branch of statistics that deals with the timing and magnitude of extreme values in sequences of random variables, can be used to recover features of the wage offer distribution in conventional search models. Using National Longitudinal Survey of Youth (NLSY) wage data, I show that the data are not compatible with specifications for the offer distribution characterized by extreme negative skewness. In addition, I show that my approach can be used to construct a bound on the returns to job seniority. My results suggest that job seniority plays only a minor role in the wage growth of the workers surveyed in the NLSY.

Keywords: D83; J31

Journal Article.  17950 words.  Illustrated.

Subjects: Information, Knowledge, and Uncertainy ; Wages, Compensation, and Labour Costs

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