New Methods for Analyzing Structural Models of Labor Force Dynamics

Abstract

This paper takes a first step toward developing econometric models for the structural analysis of labor force dynamics. Our analysis is presented in continuous tine, although most of the points raised here can be applied to discrete time models. We show that In previous attempts to estimate "structural" models of job search, a key source of information necessary to identify certain structural parameters has been neglected. We discuss the conditions under which structural search models can be estimated. In particular, the wage offer distribution must be recoverable-i.e., it must be the case that the parameters of the untruncated wage offer distribution be estimable from the truncated accepted wage distribution. The wage offer distribution must be assumed to belong to a para- metric family. Estimates of structural parameters are shown to be sensitive to the distributional assumption made.